[Click eStock] "Naver, Steady Performance Despite Economic Downturn"

Daishin Securities maintained a 'Buy' investment rating on NAVER on the 9th, setting a target price of 280,000 KRW.

Despite the macroeconomic downturn in advertising and shopping, Daishin Securities expects NAVER's search platform revenue to continue growing steadily, supported by relatively less sensitive search ads and a long-tail advertiser base. In particular, it is anticipated that the growth rate will increase in the second half of the year compared to the conservative ad spending in the first half.

The commerce sector is still maintaining low commission rates, suggesting potential for future commission rate increases. Additionally, the D2C business is expected to enhance seller and consumer lock-in effects, and the recommerce business has also shown continuous growth in transaction volume. Notably, Poshmark turned profitable in Q1 this year, improving performance faster than the company's plan, and there is ample room for further performance improvement through the introduction of search ads and live commerce. Accordingly, the brokerage commission revenue growth rate (including Poshmark) is expected to be 110% this year and 17% next year.

However, unless there is an improvement in AI segment performance, the release of new AI models is not expected to lead to a stock price increase. Leveraging its strength in holding large volumes of domestic data, NAVER appears capable of defending its search engine against global AI competitors and advancing existing businesses such as advertising, commerce, search, and fintech through its own AI. Continuous proactive investment in AI is expected to keep additional cost burdens low, and owning AI models internally is viewed positively.

Ji-eun Lee, a researcher at Daishin Securities, analyzed, “Despite the downturn in advertising and the economy, advertising is growing mainly through search ads and long-tail advertisers, with high growth expected until 2024. However, AI is judged to contribute more to long-term performance improvement than to short-term stock price gains.”