Mirae Asset Securities said on 18th that, for Kakao, the introduction of AI services is expected to rebound users' time spent and accelerate growth in advertising revenue. It raised the target price to 80,000 won from 70,000 won and maintained a "buy" rating.
Chung Shina, Kakao's CEO, said on 7th at the second-quarter earnings conference call, "This year marks the beginning of an era of AI transformation for Kakao," adding, "Starting in the second half, we will launch an overwhelming variety of AI services and reinvent ourselves as the first business-to-consumer (B2C) AI service targeting the entire nation."
Kakao will first shift the first tab from a simple profile list to a feed-style structure that shows friends' profile updates, anniversaries, and shared media from group chats. It will turn the third tab into a dedicated short-form video space to push its transition into a social platform.
It will also introduce an AI agent feature and a ChatGPT light version within KakaoTalk. According to Mirae Asset Securities, with the introduction of the AI agent and ChatGPT, KakaoTalk's time spent after next year is expected to increase by more than 8% annually through 2028. Talk Biz advertising revenue is also projected to recover by more than 17% annually.
Lim Hee-seok, an analyst at Mirae Asset Securities, said, "We are raising the multiple to 46 times from 42 times, considering next year's earnings revisions from higher Talk Biz ad revenue and successive launches of large-scale AI services," adding, "Starting with the If Kakao event on 23rd, strong momentum is expected through October, but caution is needed regarding uncertainty in November."