DAISHIN SECURITIES noted that if Kakao proves the competitiveness of its hyper-personalization platform, a valuation reassessment will be possible. It raised the target price from the previous 48,000 won to 50,000 won and suggested a 'buy' investment opinion. On the 18th, Kakao's closing price was 44,000 won.
On the 19th, Lee Ji-eun, a researcher at DAISHIN SECURITIES, explained, “The upward adjustment of Kakao's target stock price reflects expectations for new artificial intelligence (AI) businesses, which led to a reduction in the multiple discount rate applied to the valuation of its Talk Business segment (30%→20%).”
Kakao will introduce four generative AI services in the future. The first is AI search within KakaoTalk, the second is AI Mate, the third is Kanana, which will be launched as a separate application, and the fourth is a jointly developed product with OpenAI.
The researcher noted, “Among these, the fastest to be released are AI Mate and AI search, which are scheduled to be disclosed in the first half of the year,” adding, “AI Mate is expected to be launched within KakaoTalk in the form of a Talk channel.”
However, due to the limited information currently available, it is not possible to know specifically how AI Mate will be implemented. The researcher projected, “If it provides a personalized experience closely connected to users' daily lives, KakaoTalk's user metrics such as time spent and retention rates will improve.”
Accordingly, the researcher assesses that KakaoTalk's revenue per user is likely to increase. He noted, “Even though Meta's traffic growth for existing apps has stagnated, it has experienced effects such as increased ad impressions, higher ad prices, and improved commerce conversion rates by incorporating generative AI into its advertising products.”
In the meantime, Kakao has been continuously striving to energize traffic that had been focused solely on the chat tab through adding features to the Friends tab, revamping commerce, and launching the Open Chat tab. However, it has been difficult to confirm results that meet expectations.
The researcher added, “If the introduction of AI Mate and AI search leads to improvements in KakaoTalk's user metrics and subsequently drives growth in advertising and commerce, the platform's value can be reassessed.”