Eugene Investment & Securities projected that it will take time for Kakao's revenue to improve. It lowered the target stock price from the previous 51,000 won to 48,000 won. However, it maintained the investment opinion as "buy." On the 6th, Kakao's closing price was 39,150 won.
On the 7th, Jeong Hee-hoon, a researcher at Eugene Investment & Securities, said, "Kakao's fourth-quarter revenue is expected to reach 2.1 trillion won, with operating profit reaching 110.2 billion won," and noted, "Operating profit is expected to fall short of the consensus (market forecast) of 149.5 billion won."
Advertising revenue is expected to show a healthy growth rate due to the seasonal effect of message advertising revenue; however, the sluggish performance of display advertising (DA), which is relatively affected by the advertising market, is projected to continue from the previous quarter. Jeong, the researcher, judged that the sluggishness of DA will persist unless there is a significant traffic change through KakaoTalk's revamp.
Jeong noted, "Commerce revenue saw changes last month with the revamp of the gifting feature, but the short period it was reflected in the fourth quarter suggests it will show a growth rate similar to the previous quarter," and added, "The platform's other institutional sectors are expected to continue double-digit growth, thanks to the growth rates in mobility and pay."
The content sector is expected to continue its negative growth following the previous quarter. Jeong stated, "For games, existing revenue decrease and the absence of new releases, for music, the base effect from the previous year’s IVE album sales, and for media, slow production progress will lead to a decline in revenue compared to the previous year."
In terms of expenses, the fourth quarter is expected to reflect increased marketing expenses due to the peak season of certain businesses and one-off costs related to the TMON and WeMakePrice incidents in the pay sector.
Jeong forecasted that this year, Kakao will focus its business capabilities on expanding revenue in the platform sector centered on TalkBiz and on reversing revenue and improving profitability in the content sector. However, he added, "It is expected to take some time for the effects of revenue expansion strategies and profitability improvements to manifest."