Naver Announces Generative AI but Market Cap Drops by 4 Trillion Won... Why?

Since NAVER announced its generative artificial intelligence (AI) technology-based service, its market capitalization has actually evaporated by nearly 4 trillion won.

This is analyzed to be due to recent interest rate hikes and concerns about the performance of the generative AI 'HyperCLOVA X.'

Choi Soo-yeon, CEO of Naver, is unveiling the large language model 'Hyper ClovaX' for the super-large artificial intelligence (AI) service at the 'Team Naver Conference Dan23' held on August 24 at the Grand InterContinental Seoul Parnas in Gangnam-gu, Seoul. Photo by Kang Jin-hyung aymsdream@

According to the Korea Exchange on the 6th, NAVER's market capitalization recorded 34.7 trillion won as of the previous day.

This is about 3.7 trillion won less than the 38.4 trillion won peak recorded on the 7th of last month.

Experts analyzed that NAVER's market capitalization decreasing by nearly 4 trillion won in a month is due to the global trend of rising interest rates and concerns about the performance of the generative AI HyperCLOVA X.

On the day HyperCLOVA X was unveiled on the 24th of last month, a surge of users caused delays and errors in responses to commands (prompts), temporarily disrupting smooth service.

On the day HyperCLOVA X was announced, NAVER's stock price rose 6.2% but dropped 7.8% the next day, giving up all gains within a day.

Choi Soo-yeon, CEO of Naver, is unveiling the large language model 'Hyper ClovaX' for the super-large artificial intelligence (AI) service at the 'Team Naver Conference Dan23' held on August 24 at the Grand InterContinental Seoul Parnas in Gangnam-gu, Seoul. Photo by Kang Jin-hyung aymsdream@

Lee Seung-hoon, a researcher at IBK Investment & Securities, said, "Last month, as interest rates rose in the global market, it acted as a negative factor for tech companies like NAVER, and on the day HyperCLOVA X was launched, concerns about performance arose due to connection-related noise, causing the stock price to fall."

Experts predict that NAVER's stock price will continue to show a sluggish trend for the time being.

Lee Ji-eun, a researcher at Daishin Securities, said, "Although NAVER has unveiled its AI model, since a monetization model has not yet been disclosed, it seems insufficient to drive up the stock price," adding, "Advertising revenue is expected to decline in the third quarter, so the stock price is likely to remain sideways until the third-quarter earnings announcement period."