Crowdworks, Hopes Pinned on AI Superpower Committee... But What Returned Was a Rights Offering for Shareholders (Part 1) [Securities Filing Analysis]

Stock Price Soared After Appointment to AI Superpower Committee
Nearly Half of the 34 Billion KRW Rights Offering to Be Spent on Marketing

Crowdworks is launching a large-scale rights offering worth 34 billion KRW. This capital increase is expected to be painful for shareholders in several ways. This is because the decision was made when the stock price surged after the company was mentioned as a stock related to Lee Jaemyung, the presidential candidate of the Democratic Party. Given that the company currently holds 9 billion KRW in cash and cash equivalents, questions about the timing of the offering are inevitable.

◆Stock price surged as a Lee Jaemyung-related stock... What followed was a rights offering

According to the Financial Supervisory Service's electronic disclosure system (DART) on the 26th, Crowdworks plans to carry out a rights offering with a general public offering of forfeited shares after allocation to existing shareholders, amounting to 34.4 billion KRW. The expected issue price is 8,020 KRW per share, with a total of 4,295,262 new shares to be issued.

Crowdworks entered KOSDAQ in 2023 through a SPAC merger. The company provides a "data engine" for preprocessing data necessary for artificial intelligence (AI) training, and offers "AI solutions" for building large-scale, enterprise-specific language models (LLMs).

Crowdworks' stock price began to soar in April. On April 3 of this year, the price was 5,250 KRW, rising to 11,600 KRW by the 21st of this month. It appears that the appointment of Kim Wooseung, CEO of Crowdworks, as vice chairman of the "AI Superpower Committee," an external think tank for Democratic Party presidential candidate Lee Jaemyung, had an impact.

However, what followed the stock price surge was a rights offering allocated to existing shareholders. As a result, the stock price plummeted. On the 21st of this month, the price was 11,600 KRW, but on the 22nd, it dropped to 8,150 KRW, a decrease of 29.74%.

◆Out of 34 billion KRW, 19 billion KRW for R&D... The remaining 15 billion KRW for marketing

Questions about the timing are particularly inevitable. On a consolidated basis, Crowdworks' cash and cash equivalents amounted to 9.3 billion KRW in the first quarter of this year. However, according to the planned use of funds for this rights offering, the company expects to spend 3 billion KRW per quarter on research and development (R&D) and marketing. This means that, at the very least, the company could cover these expenses with its own funds until the third quarter of this year.

The allocation of funds is similar. The company plans to invest 19 billion KRW raised from this rights offering into R&D, and 15 billion KRW into marketing. Of the 15 billion KRW allocated to business marketing, 11.4 billion KRW will be invested in the agentic AI development platform Alpy, and 3.9 billion KRW in the senior-focused social platform Agetech. In its securities registration statement, the company explained, "Alpy targets the B2B (business-to-business) market in industries such as manufacturing, logistics, and distribution, and will conduct content marketing using technology blogs, exhibitions, and industry-specific media, while also promoting through global digital channels."

Regarding marketing for Agetech, the company stated, "We aim to target active seniors in their 50s to 70s, combining data-driven performance marketing with offline promotions in partnership with retirement communities and welfare institutions," adding, "We are also pursuing collaborations with public institutions." The company further emphasized, "Given the current financial structure, there are limitations to large-scale marketing investments. Therefore, we intend to use the funds raised through this rights offering to accelerate sales and promotional activities aimed at expanding our domestic and international customer base and increasing our market share."