[Click e-Stock] "SOOP to Remain Range-Bound for Now...Change Is Urgently Needed"

On December 22, Korea Investment & Securities maintained its "Buy" investment rating and target price of 105,000 won for SOOP, stating that the stock price is likely to remain flat for the time being. The closing price on the previous trading day was 69,500 won.

On this day, Jeong Hoyoon, a researcher at Korea Investment & Securities, said, "It is expected to take some time before changes that could trigger a rebound in the stock price are confirmed. We will maintain a conservative outlook for now."

Recently, SOOP has continued to experience sluggish stock performance. Jeong pointed out, "Although there have not been significant changes in earnings estimates, the valuation-measured by next year's market consensus-has fallen to a record low of 7.5 times due to the decline in stock price."

The drop in SOOP's valuation has been driven by an unfavorable market environment and a slowdown in the growth rate of its core platform business unit. Jeong explained, "Although Twitch, which once dominated the domestic personal broadcasting market, has withdrawn, Naver's Chzzzik has relatively successfully filled the gap and emerged as a new competitor. The increasing popularity of personal broadcasting through YouTube has also been an unwelcome development for SOOP."

As of the third quarter of this year, the sales growth rate of the platform business unit has declined to 1.7%. For a long time, sales growth has been driven more by the increase in average revenue per paying user (ARPPU) rather than the number of users. Jeong predicted, "Since the monthly ARPPU is estimated to be close to 100,000 won, which is similar to that of MMORPGs, there is limited room for further increases."

He added, "Key factors that could drive a rebound in the stock price include the increasing profit contribution from the advertising business unit, which continues to show relatively high growth, and, in the long term, the successful expansion of the platform in Southeast Asia. Given that the valuation is already sufficiently low, the risk of further decline is limited."