Korea Investment & Securities kept its target price for Kakao at 75,000 won. Despite harsh reviews after the overhaul of its flagship service KakaoTalk, time spent has increased, leading to the view that third-quarter results will meet market expectations. The firm also maintained its "buy" rating.
On the 17th, Korea Investment & Securities said Kakao's revenue in 3rd quarter was estimated at 2.04 trillion won, up 6% from a year earlier. It also noted operating profit likely rose 20.8% from a year earlier to 157.7 billion won, in line with market expectations.
Jeong Ho-yoon, an analyst at Korea Investment & Securities, said, "Although users' backlash was intense after the KakaoTalk overhaul, time spent appears to be steadily increasing, centered on the short-form tab," adding, "Kakao Pay and mobility are also expected to continue growing."
Korea Investment & Securities also said the growth rate of Talk Biz ad revenue is expected to recover to double digits from the 4th quarter, as new ads have begun to be added to the first and third tabs. At the end of October, ChatGPT will also be embedded in KakaoTalk.
Jeong said, "Kakao's performance is likely to improve gradually with the KakaoTalk overhaul," adding, "Ultimately, the goal is to connect Kakao's own services and a variety of domestic services, and network effects can be expected."