Naver maintains rosy outlook with photo-editing app
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By Lee Min-hyung
Naver is expected to further improve its stock value this year, on the back of the steep growth of its photo-editing app SNOW, market insiders said Tuesday.
The nation’s largest portal operator is enjoying its heyday, with its stock value rising in recent weeks amid expectations for its sales growth. Its stock price traded at 890,000 won ($811.16) at one point Tuesday, beating a previous high of 882,000 won last Friday. Observers cited growth expectations for the second half as the key reason for the rising stock value.
But analysts here said its SNOW app will further drive its ad sales in the coming months.
“We set a target stock price of 1 million won for the company, up from 940,000 won, as Naver is expected to further improve its profitability, backed by growing numbers of SNOW users and its growth in advertising sales of its subsidiary LINE, a mobile messenger service,” said Oh Dong-hwan, an analyst from Samsung Securities
In particular, the photo-editing app is gaining more-than-expected popularity from users around the world, with its download numbers growing by 10 million each month. The app hit 70 million downloads this month, holding more than 41 million monthly active users.
“Naver has yet to come up with a specific business model for SNOW,” he said. “But chances are that the company may generate massive profits in its ad sales, given Snapchat will also generate a whopping annual sales of some $370 million this year, backed by ad profits from its Live Stories service.”
Before long, Naver will set a new record in its stock price once SNOW maintains its user base and continues to expand at this pace, he said.
SNOW is receiving particularly explosive responses in major Asian markets ― including Korea, Japan and Hong Kong. The app was ranked the most downloaded app for 75 days in the free app category on Apple’s Japan App Store, according to Naver.
The analyst also said Naver will post stable growth in the July-September period, as ad sales are expected to rise due to LINE ads.
“The service will be worth 2.6 trillion by the end of this year,” he said.
The expansion of SNOW’s user base and stable growth of LINE ads will continue to drive up Naver’s stocks, according to the analyst.
Naver posted 272.7 billion won operating profit in the second quarter, up 26.3 percent from a year ago.
Ahn Jae-min, an analyst from NH Investment and Securities, previously said Naver’s stock value will continue its winning streak, given promising growth potential for SNOW, online-to-offline (O2O) businesses and mobile ads.
“In 2017, Naver will post a steep earnings growth on the back of an expansion in its local mobile advertising sales,” he said.