[Click e-Stock] "Kakao Games Needs New Titles to Outperform Expectations"

On May 8, Daishin Securities lowered its target price for Kakao Games from 17,000 won to 13,000 won, citing the rapid decline in revenue from its existing game lineup and the underperformance of new releases. The investment opinion was maintained at 'Market Perform'.

In the first quarter, Kakao Games reported sales of 122.9 billion won, a 31.1% decrease year-on-year, and turned to an operating loss of 12.4 billion won, falling short of market expectations. PC sales reached 26.8 billion won, up 30% from the previous quarter, but mobile sales declined by 15% to 96.1 billion won.

Lee Jieun, a researcher at Daishin Securities, stated, "While sales of Odin, which is estimated to account for about 40% of first-quarter revenue, remained solid in Korea, they continued to decline in Taiwan." She added, "Valhalla Survival, launched in January, contributed little to performance due to its poor market reception."

With both the existing lineup and new releases underperforming in the first quarter, the North American launch of Odin in the second quarter is also expected to deliver only limited results, and there are no highly anticipated titles on the horizon. Lee noted, "Starting with Goddess Order in the second half, new titles such as Project Q and Project C are scheduled for sequential release and are expected to drive performance growth. We anticipate a turnaround in 2026 as the impact of these releases is reflected." However, she also pointed out, "Even the valuation reflecting the performance of the new titles in 2026 remains burdensome." Given that the momentum from new releases is expected to be limited, she analyzed that a visible outperformance of new titles exceeding market expectations is necessary for a rebound in the stock price.