Naver Webtoon’s Quiet Move Toward US Listing... Apple and Amazon May Pose Obstacles

Selected as IPO Underwriters by Goldman Sachs and Morgan Stanley
Rumors of Pre-Work Including Turnaround to Profit and Restructuring

Naver Webtoon’s listing on the U.S. stock market is gradually approaching. While Naver and Naver Webtoon have not made any special statements regarding the initial public offering (IPO) in the U.S., they are quietly working behind the scenes, meeting the prerequisites for the listing one by one.

According to industry sources on the 20th, Webtoon Entertainment, the wholly-owned U.S. parent company of Naver Webtoon, has selected Goldman Sachs and Morgan Stanley as IPO underwriters and is proceeding with preparations for the listing.

Webtoon Entertainment is a corporation engaged in the development and operation of webtoon services and is the parent company that owns 100% of Naver Webtoon’s shares. Naver holds about 71.2% of Webtoon Entertainment’s shares. Although Webtoon Entertainment has not disclosed whether it will list on the New York Stock Exchange or the Nasdaq market, the industry expects Webtoon Entertainment to enter the U.S. stock market as early as June this year. The estimated corporate value is expected to be between $3 billion and $4 billion (approximately 4 trillion to 5.34 trillion KRW), and it is estimated that more than $500 million can be raised through the IPO.

Naver and Naver Webtoon have stated that it is difficult to confirm details about the listing process. However, they appear to be preparing while meeting the conditions for the listing. As of the end of 2022, Webtoon Entertainment’s total assets amounted to 1.3566 trillion KRW, and its capital was 1.3194 trillion KRW. The number of outstanding shares exceeds 3.23 million. In terms of capital and outstanding shares, it already meets the listing requirements of the New York Stock Exchange (capital over $4 million and outstanding shares over $15 million) and the Nasdaq market (capital over $5 million and outstanding shares over 1 million shares).

The prerequisite of turning a profit in the webtoon division, necessary for the listing, has also been met. Naver stated that through marketing cost efficiency and focusing on core services and regions, the webtoon division improved from a loss of 20.2 billion KRW in Q4 2022 to a profit of 600 million KRW last year. Notably, Naver Webtoon turned a profit for the first time in six years since it was spun off from Naver’s internal independent corporation (CIC) into a separate entity.

Additionally, Webtoon Entertainment’s restructuring of a small number of personnel is also seen as a preparatory step for the listing. Webtoon Entertainment notified about 40 employees of layoffs earlier this year, which is reported to be about 3% of the total workforce. Despite decent business performance, the slight restructuring led the market to interpret that Webtoon Entertainment is conducting preparatory work ahead of the listing.

However, there is also analysis that the listing may be delayed due to the emergence of competitors. Robert Lee and Jasmine Ryu, researchers at Bloomberg Intelligence, explained, “With Apple and Amazon entering the webtoon comics sector, competition is intensifying and business growth prospects are slowing, which may make pursuing an IPO difficult.”