Settings

ⓕ font-size

  • -2
  • -1
  • 0
  • +1
  • +2

Naver, Kakao lose W12 tril. in market cap

  • Facebook share button
  • Twitter share button
  • Kakao share button
  • Mail share button
  • Link share button
Kakao and Naver logos
Kakao and Naver logos

By Anna J. Park

Korea's two representative big tech companies Naver and Kakao have lost more than 12 trillion won in their market cap over the past four trading sessions, as their stock prices logged a downward pattern of continual slide. The fall is ascribed to various factors, including negative stock market shocks from the U.S., rising foreign exchange rates and unsatisfactory fourth-quarter earnings estimates.

Naver ended at 338,000 won ($281), a 0.15 percent fall from the previous session, which is a seven-day consecutive losing streak. Kakao's stock price closed at 100,000 won on Friday, which is the same price from Thursday's closing. The current stock prices are each a fall of 27.2 percent and 42.2 percent from their peak levels logged last summer, respectively. Just this year alone, Naver's market cap lost 6.5 trillion won, while Kakao lost 5.5 trillion won. Both overseas and institutional investors are leading the slide of the stock prices, as they have been net-selling the two stocks since the end of last year.

Market analysts view that the hints of an early tapering, suggested by the recently revealed minutes from a Federal Open Market Committee (FOMC) meeting in December, impaired investor sentiment in both the U.S. and Korean stock markets.

"A more hawkish stance has been suggested at the FOMC meeting, and it burdened the U.S.' growth tech stocks, which also negatively affected Naver and Kakao," said Kim Seok-hwan, analyst at Mirae Asset Securities.

Lower-than-expected estimates for fourth-quarter earnings also put downward pressure on the stocks. According to Hana Financial Investment, Naver's fourth-quarter operating profit consensus is around 369.4 billion won, which is about a 5.6 percent fall from the previous month's estimates. Kakao's fourth-quarter consensus also logged some 187 billion won, which is about 10.9 percent down from the earlier market consensus.

"Both big tech companies are expected to log operating profits lower than the market consensuses, due to the increase of personnel expenses and marketing costs," said Yoon Ye-ji, researcher at Hana Financial Investment.

Concerns over tighter regulations are another key part of uncertainties that the stocks are facing. Uncertainties about regulations are not likely to be dissolved until after the country's presidential election on March 9.

"While several bills aiming for further regulation of online platform companies and for strengthened protection of platform users are pending at the National Assembly, the ruling party presidential candidate has also warned of a need for stronger regulation on them," pointed out Oh Dong-hwan, analyst at Samsung Securities.

Yet, market analysts remain optimistic, stressing that the companies' long-term profitability is still valid, adding that the stock prices are likely to log a recovery after the current correction period. The firms' global content revenues as well as profits from their new business sectors are expected to bring additional profits and growth momentum for the slumped stock prices.


Park Ji-won annajpark@koreatimes.co.kr


X
CLOSE

Top 10 Stories

go top LETTER