SEOUL, June 8 (AJP) - Kakao fell to 37,600 won on Monday morning, hitting a fresh 52-week low before recovering much of the decline. The sharp swings suggested that investors remain unconvinced that the messaging giant's push into artificial intelligence is driving the user engagement needed to support a recovery.
Roughly 96,700 retail investors holding the stock remain deep in the red, sitting on an average loss of more than 50 percent against an average purchase price of 83,068 won.
As of 11:30 a.m., Kakao traded at 39,050 won (US$25.1), down 1,200 won or 3.0 percent, having clawed back more than half of an early slide that briefly took it 6 percent lower. The stock opened at 40,000 won, matching the day's high, then sank to 37,600 won in mid-morning trade, a fresh 52-week low, before buyers stepped back in. The shares are down roughly 41 percent this year and sit far below their 52-week high of 71,600 won.
The doubt centers on a single metric the company has yet to move. Kakao has built its recovery case on expanding AI features within KakaoTalk and reviving its advertising and commerce businesses, but the market wants proof that AI adoption is lifting the time users spend on the platform and feeding through to ad revenue. For a platform company, engagement and traffic are the core indicators, and without their recovery, analysts argue, expectations of improved profitability alone will not be enough to lift the shares.
Brokerages have been trimming their expectations accordingly. Recent target prices include 58,000 won from Mirae Asset Securities, 60,000 won from Daol Investment & Securities and 69,000 won from KB Securities. While the cleanup of subsidiaries and cost efficiencies are viewed positively, persistent questions about growth in the core business have blocked a re-rating of the stock. Kakao trades at 35 times earnings, a multiple that leaves little room for disappointment on growth.
Lim Hee-seok, an analyst at Mirae Asset Securities, captured the tension. He noted that improving profitability through the restructuring of subsidiaries is a positive, but judged that a re-rating would be difficult until a visible result emerges, specifically an acceleration in KakaoTalk engagement driven by the AI adoption the market is counting on.
That the stock found buyers at its low, even on a day when the broader market sold off sharply, suggests some investors see value below 38,000 won. But the rebound rests on price, not proof. Until engagement data turns, the floor Kakao tested Monday is unlikely to be the last.
Roughly 96,700 retail investors holding the stock remain deep in the red, sitting on an average loss of more than 50 percent against an average purchase price of 83,068 won.
As of 11:30 a.m., Kakao traded at 39,050 won (US$25.1), down 1,200 won or 3.0 percent, having clawed back more than half of an early slide that briefly took it 6 percent lower. The stock opened at 40,000 won, matching the day's high, then sank to 37,600 won in mid-morning trade, a fresh 52-week low, before buyers stepped back in. The shares are down roughly 41 percent this year and sit far below their 52-week high of 71,600 won.
The doubt centers on a single metric the company has yet to move. Kakao has built its recovery case on expanding AI features within KakaoTalk and reviving its advertising and commerce businesses, but the market wants proof that AI adoption is lifting the time users spend on the platform and feeding through to ad revenue. For a platform company, engagement and traffic are the core indicators, and without their recovery, analysts argue, expectations of improved profitability alone will not be enough to lift the shares.
Brokerages have been trimming their expectations accordingly. Recent target prices include 58,000 won from Mirae Asset Securities, 60,000 won from Daol Investment & Securities and 69,000 won from KB Securities. While the cleanup of subsidiaries and cost efficiencies are viewed positively, persistent questions about growth in the core business have blocked a re-rating of the stock. Kakao trades at 35 times earnings, a multiple that leaves little room for disappointment on growth.
Lim Hee-seok, an analyst at Mirae Asset Securities, captured the tension. He noted that improving profitability through the restructuring of subsidiaries is a positive, but judged that a re-rating would be difficult until a visible result emerges, specifically an acceleration in KakaoTalk engagement driven by the AI adoption the market is counting on.
That the stock found buyers at its low, even on a day when the broader market sold off sharply, suggests some investors see value below 38,000 won. But the rebound rests on price, not proof. Until engagement data turns, the floor Kakao tested Monday is unlikely to be the last.
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