[Click eStock] "Kakao, Improvement of KakaoTalk Traffic in the Second Half is Key"

Daishin Securities forecasted on the 14th that a positive trend in Kakao's stock price will emerge once improvements in KakaoTalk's traffic indicators are confirmed following the launch of new services within KakaoTalk in the second half of this year. The buy rating and target price of 50,000 KRW were maintained.

Lee Ji-eun, a researcher at Daishin Securities, stated, "Kakao's first-quarter earnings are expected to fall short of market expectations," adding, "The slowdown in core business growth and continued weakness in the content business are anticipated."

Kakao's first-quarter revenue is estimated at 1.8861 trillion KRW, down 5.1% year-on-year, and operating profit is estimated at 93.5 billion KRW, down 22.3% over the same period. Both revenue and operating profit are expected to underperform market forecasts.

The researcher explained, "Due to the off-season effect on advertising and the heightened base effect of messenger advertising, a slowdown in revenue growth is expected," adding, "Commerce will also continue to see a deceleration in transaction growth rates, and content business revenue is expected to continue its negative growth following the previous quarter."

However, Kakao expressed optimism regarding the introduction of new services such as AI services and feed content within KakaoTalk, announced earlier this year. Kakao is expected to unveil related features as early as the beginning of the third quarter.

Lee said, "If user dwell time within KakaoTalk increases after the introduction of new services, the average revenue per user (ARPU) growth rate per KakaoTalk subscriber is also expected to improve," adding, "KakaoTalk's annual ARPU growth rate has stagnated at 4% and 5% year-on-year in 2023 and 2024, respectively."

She further noted, "Naver also recovered its slowed advertising revenue growth rate to the low double digits through the introduction of Home Feed," and predicted, "A positive trend in the stock price will be seen once improvements in KakaoTalk's traffic indicators are confirmed following the launch of new services."