Park Jae-hyuk is a seasoned journalist who has provided comprehensive coverage of South Korea's corporate dynamics, economic policies, industry challenges and the global positioning of Korean companies. Based on the articles he has written since joining The Korea Times in 2016, his investigative approach has helped readers understand corporate governance, economic trends and business strategies shaping South Korea’s economy.
Will Naver Webtoon become 'Asia's Disney' via Nasdaq listing?
Naver Webtoon and Webtoon Entertainment founder and CEO Kim Jun-koo speaks during a press conference at a hotel in San Francisco in this January 2023 file photo. Courtesy of Naver Webtoon
By Park Jae-hyuk
Webtoon Entertainment prices US IPO at top of range
Naver's webtoon subsidiary is drawing attention and raising expectations among market insiders who are eager to see if the Korean digital comic platform provider will continue attracting investments and evolve into an intellectual property (IP) powerhouse following the Nasdaq listing of its U.S. headquarters.
A day before its U.S. listing on Thursday (local time), Naver Webtoon’s American headquarters, named Webtoon Entertainment, priced its initial public offering (IPO) of 15 million common stocks at the top price range of $21 per share. In other words, Webtoon Entertainment was allowed to raise $315 million through the IPO.
This also means that the company’s valuation was estimated at $2.7 billion just before its listing.
Analysts said the pricing reflects strong investor interest in the Korean webtoon industry. They expected the bullish investor sentiment toward Webtoon Entertainment to continue.
“The company is able to monetize its content by adapting it into other media formats such as film, streaming series, games, merchandise and print books,” said Douglas Kim, an analyst at Smartkarma, a Singapore-based investment research firm. “We believe the company has a scalable, sustainable business which is likely to benefit from the strong global growth of webtoon services.”
Webtoon Entertainment was founded in Los Angeles in 2016 as a subsidiary of Naver and the parent company of Naver Webtoon, aiming to help the Korean company enter the North American web comic market.
Even after the U.S. IPO, Naver will remain as Webtoon Entertainment’s controlling shareholder, with a 63.4 percent stake and rights to appoint its directors. LY Corp. will also remain as a major shareholder with a 24.7 percent stake.
In addition, Naver Webtoon and Webtoon Entertainment founder and CEO Kim Jun-koo is expected to earn nearly 90 billion won ($65 million) after the Nasdaq listing, as the 47-year-old will receive stock options, as well as a cash bonus for his contribution to the company’s growth since he joined Naver as a rank-and-file engineer in 2004.
Last year, Kim told reporters in Silicon Valley that his company aims to become “Asia's Disney,” helping creators introduce their IPs globally.
“Anyone with a story to tell can publish on Webtoon Entertainment and reach millions,” he said in a letter to the U.S. Securities and Exchange Commission. “Many stories have also become global fandoms, adapted into film, streaming series, animation, video games and more. And many of these adaptations have ranked No. 1 globally on platforms such as Netflix, Amazon Prime Video, and Apple TV.”
As Kim said, dozens of Naver Webtoon comics have already been adapted into different formats, including "All of Us Are Dead" and "Hellbound," the Netflix series that gained global popularity. With the Nasdaq listing, the company is expected to expand its IP business in the North American market.
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However, Webtoon Entertainment is still tasked with dispelling concerns over its profitability.
The company managed to post its first-ever net profit during the first quarter by reducing costs ahead of the IPO. As of the end of last year, its cumulative deficit reached $363 million.
“We have experienced rapid growth in recent periods, and our historical growth rates may not be indicative of our future performance,” Webtoon Entertainment said in a prospectus. “We have a history of net losses, and we anticipate increasing expenses in the future, and we may not achieve or maintain profitability.”
Shinhan Securities analyst Kim A-ram also warned that the web comic market’s growth has already become sluggish and that the situation could be prolonged amid fierce competition.