Kakao shares were weak on the morning of the 24th. Despite a sweeping overhaul of services, including a friends tab and artificial intelligence (AI) features, investor response appears tepid.
As of 9:35 a.m. on the 24th, Kakao was trading at 63,000 won on the Korea Exchange, down 300 won (0.47%) from the previous session. This marked a third straight decline through the day, with the share price falling by nearly 5% over the period.
Earlier, Kakao said the previous day at the IF Kakao Conference that it had embarked on a sweeping service overhaul for the first time in 15 years. Changes include turning the friends list screen in KakaoTalk into something like Instagram and creating a space to view "short-form content" such as Shorts or TikTok separately.
User reaction, however, has not been favorable. That is because the overhaul weakens the nature of the existing messenger and strengthens the social media character similar to Instagram. When negative reactions such as "Do not update KakaoTalk" spread on online communities the previous day, the share price fell more than 4% at one point.
Jeong Ho-yoon, an analyst at Korea Investment & Securities, said that "the changes to watch are the feed-style friends tab and the addition of short-form content," adding, "It will shift into a diversified platform that strengthens relationships with people around you in the messenger like a social media service and enables content consumption, and, in business terms, it will begin monetization by adding advertising."
However, while saying that "from the standpoint of earnings alone, this is a sufficiently positive change," he added, "We cannot yet be sure whether users will engage with and consume the content and ads with interest like other social media. As the continued exposure of the daily lives of people with little interest could increase user fatigue, responses will be needed going forward."