Kakao Stock Price Falls 9.05%
Estimated Loss of 22 Billion KRW
Brokerage Target Price Cut by 40%
Data Center-Related Stocks Benefit
[Asia Economy Reporters Hwang Yoon-joo, Kwon Jae-hee, Lee Myung-hwan] The 'Black Monday' for Kakao Group's listed companies has become a reality. Following a data center fire over the past weekend that caused most of Kakao's services to be down for nearly a day, the disappointment of concerned investors led to a sell-off from the market opening. This year, amid global interest rate hikes, controversies over physical division, and now this service outage, there is even a joke that Kakao Group is facing a triple disaster (Samjae, 三災).
According to the Korea Exchange on the 17th, as of 9:06 AM, Kakao's stock price fell 9.05% from the previous trading day to 46,750 KRW. At the same time, KakaoBank dropped 8.57% to 16,000 KRW, KakaoPay fell 9.14% to 32,800 KRW, and KakaoGames declined 8.37% to 35,050 KRW.
Kakao's Damage Estimated at 20 Billion KRW... Target Price Cut by 40%
The loss from the fire is estimated to be around 20 billion KRW. Securities firms predict that the stock price decline and the impact on Q4 earnings will be inevitable. Samsung Securities analyst Oh Dong-hwan said, "The revenue impact from this service suspension will appear as lost sales and user compensation," adding, "Q4 revenue is expected to decrease by up to 1-2%." KB Securities analyst Lee Sun-hwa also analyzed, "Based on the expected Q4 revenue, the damage Kakao will incur is about 22 billion KRW," and noted, "Discussions on compensation for paid services are underway, making cost increases unavoidable."
Some securities firms have significantly lowered Kakao's target stock price due to the decline in brand value caused by this service disruption. Eugene Investment & Securities lowered Kakao's target price from 106,000 KRW to 65,000 KRW. Korea Investment & Securities also cut it from 100,000 KRW to 80,000 KRW.
SK C&C, which operates the data center, is also expected to face unavoidable damage. SK C&C handles SK's system integration (SI) and IT outsourcing businesses and is the third-largest IT service company in Korea. On the morning of the 17th, SK's stock price fell more than 4%, breaking below 200,000 KRW. The responsibility dispute over the Kakao incident triggered a flood of sell orders.
Data Center-Related Stocks Surge
Over the past weekend, due to a fire at the SK C&C data center, major Kakao services including KakaoTalk were suspended. On the 17th, recovery work is underway at the SK C&C data center in Seongnam, Gyeonggi Province. Seongnam ? Photo by Kang Jin-hyung aymsdream@
While Kakao and SK were frowning, some stocks were smiling. Stocks of companies operating data centers surged sharply from the market opening. The incident highlighted the importance of data center construction, leading to expectations of benefits for related stocks.
As of 9:22 AM on the same day, Comtec Systems, a network solutions company, traded at 692 KRW, up 17.09% from the previous day on the Korea Composite Stock Price Index (KOSPI). At the same time, NHN rose 6.98% to 23,000 KRW, and Lotte Data Communication Company increased 5.22% to 24,200 KRW. Other data center and network-related companies such as Duzon Bizon (4.17%), Daou Technology (2.33%), and NHN (4.19%) also showed a collective upward trend.
On the KOSDAQ market, Data Solution hit the upper price limit, Zoom Internet rose 27.89% to 3,645 KRW, and Openbase increased 14.71% to 2,730 KRW. Additionally, Moa Data (13.64%), Gabia (10.70%), and Korea Information & Communications (10.49%)?all network-related stocks?recorded double-digit gains.
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