Lee Yeon-woo is a financial journalist at The Korea Times. Her wide range of reporting includes policies, macroeconomics, stock market, companies and even crypto. She is passionate about connecting the dots in Korean finance and making it easier for foreign nationals to understand. Based on her previous experience as a national reporter, she also has a keen interest in social issues within the sector, including gender equality and ESG. Your tips and insights are always appreciated. You can send them to yanu@koreatimes.co.kr.
Naver Webtoon's plan for Nasdaq listing draws mixed views
Naver headquarters in Seongnam, Gyeonggi Province / Courtesy of Naver
By Lee Yeon-woo
Naver Webtoon is preparing for a Nasdaq listing as early as June. While market observers anticipate that the listing could boost investor sentiment in the domestic webtoon industry, some question its effectiveness, suggesting it could harm Naver's already weak share price.
According to industry sources, Wednesday, Naver Webtoon's U.S. corporate body, Webtoon Entertainment, has recently selected initial public offering (IPO) underwriters, aiming for a Nasdaq listing in June. A report by Bloomberg identified the underwriters as Goldman Sachs and Morgan Stanley.
If Webtoon Entertainment successfully gets listed, its corporate value is expected to reach between $3 billion and $4 billion. The listing would represent the second occasion of a Naver affiliate going public, following the listing of Line in the United States and Japan.
A recent improvement in performance led to the decision to take the firm public. Last year, Naver's global webtoon sector saw a 41 percent increase in sales, reaching 1.5 trillion won ($1.1 billion). Simultaneously, the deficit from the operating loss of its content businesses, including the webtoon sector, decreased by 37.96 percent.
The brokerage industry believes that Naver Webtoon's listing could boost its financial performance and fuel investor sentiment in the webtoon industry. The webtoon industry experienced a less favorable performance between 2022 and 2023, with transaction volume stagnating.
"The announcement of Naver Webtoon going public not only reinvigorates market interest in webtoons but also sets the stage for anticipated market growth through enhanced marketing efforts and the expansion of IP businesses," Shinhan Securities analyst Kim A-ram said.
"Ahead of its IPO, Naver Webtoon has launched numerous initiatives. These are expected to yield positive financial outcomes, with benefits in the short, medium and long term."
However, some analysts expressed skepticism about the effectiveness of Naver Webtoon's IPO, arguing that it may not lead to a short-term rise in Naver's share price. There are concerns that could reduce the share price due to the dilution of Naver's ownership stake.
"Regrettably, Naver Webtoon's IPO is not expected to act as a catalyst for a short-term rise in Naver's stock price. The valuation of $4 billion for the company is insufficient to significantly affect Naver's share price. Furthermore, considering the dilution of Naver's stake post-IPO, it might have a negative impact on the share price," Korea Investment & Securities analyst Jung Ho-yoon said.
Jung stressed the importance of post-IPO strategies. "The capital raised from the IPO should be invested strategically in marketing initiatives to expand the user base and in identifying promising IPs for global success. This approach is crucial for laying the foundations for long-term growth."