Meritz Securities said on the 22nd that Kakao's recovery in the advertising institutional sector is weak. It lowered the target price by 14% to 74,000 won from 86,000 won. However, it maintained a Buy rating, noting that expectations remain for the impact of introducing ChatGPT. The previous trading day, Kakao's share price was 62,300 won.
Researcher Lee Hyo-jin at Meritz Securities said, "The first-trial verdict for Chair Kim Beom-su was not guilty the previous day, suggesting the bottom in sentiment has been passed," but added, "For the strong trend through August to manifest once again, performance from the updates is ultimately important."
She went on, "On Sept. 23, Kakao unveiled new products, changed tabs, and secured multiple ad inventories, but given user reactions to the first tab, the company decided to roll back," adding, "Short-form content, which had the highest expectations for ad performance, is placed on the third tab, and due to low usage we are lowering our estimates."
Accordingly, the daily average revenue outlook for Biz Board was also lowered. The researcher revised the fourth-quarter (October–December) Biz Board daily revenue down to 1.22 billion won from 1.38 billion won. The 2027 daily average revenue forecast was also revised to 1.76 billion won from 2.0 billion won.
Still, she saw growth momentum remaining. The researcher emphasized, "This month, the introduction of ChatGPT is the final key that will determine the direction," and "We maintain expectations for increased ad inventory and overall traffic from the introduction of ChatGPT. On-device or AI agents will ultimately need users to stay longer on KakaoTalk to deliver results."
Meritz Securities estimated that Kakao will post consolidated revenue of 1.9793 trillion won and operating profit of 160.8 billion won in the third quarter (July–September) this year. Those figures are up 3% and 23.2%, respectively, from a year earlier.
The researcher said, "Overall, revenue is similar to the second quarter, with a slight increase in marketing expenses," adding, "The company had flagged higher second-half marketing expenses (as a share of revenue). We expect 5.0%, up 0.5 percentage point from the first half."
She added, "On Sept. 23, advance sales for new ads tied to the update were conducted," and "As with competitors, we expected advertisers to front-load ahead of Chuseok, but it appears to have ended with daily revenue similar to the second quarter (1.1 billion won)."