[Market Focus] Kakao Rises Over 4% on Expectations of Earnings Growth in Second Half

Kakao is showing strong performance on June 18. This comes as securities analysts predict significant growth in the company's earnings in the second half of the year, driven by its artificial intelligence (AI) services.

As of 10:50 a.m. on this day, Kakao was trading at 54,200 won, up 2,400 won (4.63%) from the previous trading day.

On this day, Daol Investment & Securities released a report raising its target price for Kakao from the previous 52,000 won to 68,000 won.

Kim Hyeyoung, a researcher at Daol Investment & Securities, stated, "We are revising both earnings and valuation upward based on the launch of the 'Discovery' section and the momentum from AI services."

She explained, "There are three main expectations for the second half of the year: first, the expansion of advertising inventory and increased user engagement through the Discovery section in the third quarter; second, the expansion of Powerlink revenue through generative AI search; and third, the gradual increase in revenue and momentum through three collaborative projects with OpenAI scheduled for release within 2025."

Based on these factors, the company estimates Kakao's revenue for this year at 8.0908 trillion won, up 2.8% year-on-year, and operating profit at 587.5 billion won, up 27.7% from the previous year.

In the second half of this year, Kakao plans to create a 'Discovery' section within KakaoTalk and strengthen its daily content features. The company explained that the Discovery section will provide users with a feed-based service for trendy short-form content.