[Click eStock] "Kakao, Short-Term Stock Price Rise Difficult... Target Price ↓"

Lack of Competitiveness Due to Slowing External Growth

Shinhan Investment Corp. evaluated that Kakao's external growth has slowed down on the 8th. Accordingly, they maintained the investment opinion as 'Buy' but lowered the target price to 40,000 KRW.

Researcher Kang Seok-oh of Shinhan Investment Corp. stated, "As subsidiary costs are reduced, there is also a lack of new content for external growth," adding, "Due to the decline in multiples of overvalued subsidiaries and lack of competitiveness, short-term stock price increases are expected to be difficult."

In particular, Researcher Kang expressed concerns about the competitiveness of Kakao's AI KakaoTalk app, Kanana. He said, "It has not shown significant differences compared to applications already on the market, and there are questions about its future competitiveness and usability," diagnosing that further verification is necessary. While it is fortunate that separate businesses remain solid, it implies that an AI app capable of generating new traffic is urgently needed.

Additionally, due to the slowdown in advertising and commerce growth and subsidiary underperformance, most multiples of business divisions were downgraded. Researcher Kang analyzed, "Especially, the multiples discount rate for content subsidiaries such as webtoons, games, entertainment, and media was increased more than Bizboard (advertising) and Gift (commerce) based on KakaoTalk," adding, "Although the content industry is not negative, showing such growth slowdown indicates a lack of content competitiveness."

He continued, "Restructuring of subsidiaries or recovery of business viability is expected to determine the future stock price."