Is the National Liquor's Name Worth It? Naver Stock Rises About 12% in Two Months

Growing Expectations for Easing of US Federal Reserve Tightening Boost Investor Sentiment
Anticipated Benefits from Twitch Withdrawal... 'Chijijik' Game Streaming Platform Beta Launch on 19th

Naver Headquarters. Photo by Jinhyung Kang aymsdream@

The stock price of Naver, which had become a headache from a popular stock, has risen about 12% over the past two months. This is attributed to the revived investor sentiment amid growing expectations that the U.S. Federal Reserve's (Fed) tightening stance has effectively ended, along with the news of Twitch's withdrawal from Korea.

According to the Korea Exchange, Naver's stock price rose 11.8% from 190,900 KRW to 213,500 KRW over the past two months (October 6 to December 6) based on closing prices. Expanding the period to the second half of this year (July 1 to December 6), it increased 12.7% from 189,300 KRW to 213,500 KRW.

The biggest factor behind the stock price increase is the Fed's monetary policy. Naver's stock price hit a yearly low of 178,300 KRW on October 23 and has been on an upward trend since. This coincided with the Federal Open Market Committee (FOMC) meeting held from October 31 to November 1 (local time). At that time, the Fed kept the benchmark interest rate (5.25%?5.50%) unchanged. Subsequently released minutes confirmed opinions to monitor economic indicators, leading to a prevailing view that the benchmark rate will be held steady at the December FOMC as well.

Additionally, the announcement that the global streaming platform Twitch will withdraw from Korea is also interpreted as having a positive impact on Naver's stock price. Naver plans to beta launch its game streaming platform 'Chijijik (tentative name)' on the 19th. Analysts expect Naver to gain a windfall if Twitch ceases operations on February 27 next year. If Naver successfully attracts Twitch streamers and secures user traffic, it could positively affect its core business performance, such as commerce (advertising), by linking with its own communities like Naver Cafe and Blog.

Twitch's revenue last year is estimated at $2.8 billion (approximately 3.5 trillion KRW). The share of Korean-language broadcast viewing time is known to be 6%. Converting this, Twitch's domestic revenue is estimated at 203.6 billion KRW for last year. Expected operating profit is about 50 billion KRW. Although this is not a large portion of Naver's consolidated operating profit, it is analyzed that attention should be paid to the potential connection to commerce revenue.

Kim Hajung, a researcher at Daol Investment & Securities, said, "Major Twitch streamers are already actively using Naver Cafe and other platforms, so the possibility of successfully securing traffic is high," and added, "If interest rate cuts occur, the valuation attractiveness is expected to become stronger."