The foreign and institutional investor demand for 'Nekao' (Naver and Kakao), which is a leading domestic growth stock, is sharply divergent. While investments were increased for Kakao, which has a specific schedule related to the artificial intelligence (AI) business, the business of Naver (NAVER) was seen as highly uncertain, leading to selling pressure.
According to the Korea Exchange on the 27th, foreigners purchased Kakao the most among domestic stocks, with a scale of 467 billion won from the 1st to the 26th of this month. This is more than twice the net purchase of Hyundai Motor (194 billion won). In contrast, Naver recorded a net sell of 659 billion won, placing second in foreign net sales after Samsung Electronics.
Kakao and Naver reported operating profits of 185.9 billion won and 521.6 billion won, respectively, in the second quarter of this year, marking increases of 39% and 10% year-on-year while maintaining solid performance in their existing businesses.
However, there is a significant difference in the outlook for the AI business going forward. At this point, it seems that investors' expectations and concerns about performance are reflected in the demand for the two stocks. This month, the stock price of Kakao rose by 12.07%, while Naver fell by 5.96%.
Evaluations in the securities community also align with the views of foreign and institutional investors. Among the 19 securities firms that issued reports on Kakao this month, 14 raised their target prices (average of 78,810 won). None of them adjusted their targets downward. In contrast, of the 19 securities firms reporting on Naver, only Shinhan Investment & Securities (210,000 won to 250,000 won) increased their target price, while Samsung Securities (350,000 won to 330,000 won) and Meritz Securities (350,000 won to 283,000 won) reduced theirs.
Kakao anticipates increased advertising revenue in the second half of the year ahead of the KakaoTalk overhaul in September. They will also unveil a collaborative project with OpenAI at next month's developer conference, 'IF Kakao.' DAOL Investment & Securities predicted that ChatGPT would be usable within KakaoTalk before early November. Additionally, the AI agent 'Kanana' is expected to be launched within the year.
If the KakaoTalk overhaul settles successfully, traffic is expected to increase by more than 20%, and the effects of the overhaul will be reflected immediately in the fourth quarter, which is the peak advertising season. Nam Hyo-ji, an SK Securities researcher, noted, 'Although there are significant concerns about the feed-type layout set to be updated in September, we can expect positive effects by looking at global examples (Reels and Shorts) that have made significant contributions to advertising revenue growth,' and added, 'With the impact of the AI agent launch, it is the top preferred stock in the sector.'
In contrast, Naver has introduced AI services in search and commerce, but there are criticisms that the changes in growth rate are minimal. Notably, they acquired Wallapop, a 'Spanish version of Carrot Market,' for 850 billion won on the 5th, after which foreign selling pressure intensified. They previously acquired platforms like Poshmark in North America and Soda in Japan to enter the global C2C (consumer-to-consumer) business, but this did not help improve performance. Currently, excluding new acquisitions, the C2C goodwill is valued at 1.7 trillion won, raising concerns about potential impairment by year-end.
Lee Hyo-jin, a Meritz Securities researcher, said, 'Cash depletion due to C2C acquisitions that do not contribute to commerce profits and revenue base effects are factors that make investors hesitant.' She further noted, 'Amid the growing B2C (business-to-consumer) AI market, Naver needs to secure consensus with investors on its strategy.'