Significant Decline Compared to Market This Year
Expecting Naver Webtoon Rebound with Exchange Rate Normalization
Possible Improvement in Investment Sentiment for Webtoon Sector
In the domestic stock market, an analysis has emerged suggesting that an investment opportunity has arisen as webtoon stocks have plummeted. The webtoon sector saw stock prices rise ahead of the Naver Webtoon listing but has since experienced a downward trend. Although the stock prices of major listed webtoon companies have fallen sharply compared to the beginning of the year, considering the earnings forecasts for the second half, a stock price rebound seems possible.
According to the financial investment industry on the 16th, this year, the stock prices of YLAB and Kidari Studio have fallen by 41% and 36%, respectively. The stock prices of D&C Media and Mr. Blue also recorded declines of around 30%. The decline is greater than the 15% drop in the KOSDAQ index during the same period.
Aram Kim, a researcher at Shinhan Investment Corp., explained, "The webtoon sector has continuously declined as the Naver Webtoon listing was perceived as a material event that has now dissipated," adding, "Since the supply and demand are lacking, if interest returns to growth stocks, companies that have been excessively neglected relative to their profit strength are likely to benefit."
As investment sentiment in the webtoon sector weakened, the stock prices of most listed companies grouped under this theme fell. Looking at the sharp decline in trading volume of related stocks, it is clear that the sector is being sidelined in the domestic stock market.
An event that influenced investment sentiment in the webtoon sector this year was the listing of Naver Webtoon (Webtoon Entertainment) on the U.S. Nasdaq market. It was listed at an IPO price of $21, rose to a high of $25.7, but recently dropped to $10.4. As the stock price fell to about half the IPO price, investment sentiment toward the webtoon sector also weakened.
About 80% of Webtoon Entertainment's sales come from paid subscriptions. Webtoon Entertainment's second-quarter sales were $321 million, a 0.1% increase compared to the same period last year. In the second quarter of this year, the Korean won and Japanese yen weakened. Since Webtoon Entertainment has a high sales proportion in Korea and Japan, it was at a disadvantage when converting sales into dollars. As the won and yen exchange rates normalize, there is a high possibility that earnings in the third and fourth quarters of this year will meet market expectations.
If the perception that Webtoon Entertainment's stock price has bottomed out strengthens, the webtoon sector listed on the domestic stock market could also seize a chance for a rebound. Researcher Kim said, "Looking at individual companies, there are those with themes that could be highlighted," and expressed hope that "if interest returns to growth stocks, momentum could arise centered on these companies."
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