Lee Min-hyung joined The Korea Times in 2014 and has worked as a journalist mainly in Korea’s finance, tech and automotive industry. He specializes in content creation, breaking news and in-depth analysis currently on transportation and mobility. You can reach him via mhlee@koreatimes.co.kr.
Kakao shares nosedive on rate hikes, weak earnings outlook
Kakao's headquarters on Jeju Island / Yonhap
By Lee Min-hyung
By Lee Min-hyung
Kakao shares are showing little signs of a rebound, as persistent fears of additional rate hikes by the U.S. Federal Reserve weaken investor confidence particularly in major growth stocks, analysts said Friday.
Kakao is the operator of Korea's dominant mobile messenger platform, KakaoTalk. The company was considered to be the biggest beneficiary of the pandemic-induced stock rally here last year. In June 2021, Kakao shares reached a historic high of more than 170,000 won per share amid near-zero interest rates at the time and booming market sentiment.
But the company was hit hardest by an abrupt shift in global macroeconomic conditions this year. The stock price of Kakao closed down 7.12 percent at 50,900 won on Friday. Other major tech growth stocks here, such as Naver, also suffered major losses in their values during the same period.
Market analysts also remained pessimistic on a potential near-term rebound of the nation's representative growth stocks due to the firm's lukewarm earnings performance and prolonged uncertainty in the global financial market.
“We revised down Kakao's target stock price by 13 percent to 90,000 won per share, as the firm's sales growth is forecast to slow down in the third quarter,” Hyundai Motor Securities analyst Kim Hyun-yong said.
Shares of Kakao's key subsidiaries are also extending their losing streaks.
The stock price of KakaoBank, the nation's leading internet-only bank, has drastically declined for the past few months. The firm's stock value soared to more than 90,000 won shortly after going public in August 2021, but ended up losing momentum for a rebound.
KakaoBank shares were traded at below 20,000 won as of Friday. Securities firms are also on track do readjust its target stock price amid sluggish loan sales expansion here.
“The firm's housing loan growth slowed down amid the freezing real estate market here,” DB Financial Investment analyst Lee Byung-gun said. The company cut the target stock price down to 16,200 won per share from 24,600 won.
Other analysts also pointed out that a potential rebound of growth stocks appears unlikely over the short term amid the unfavorable global macroeconomic environment.
“The stock prices of global big tech firms ― such as Naver ― have dropped significantly amid continuing key rate hikes by the Fed,” Korea Investment & Securities analyst Chung Ho-yoon said. “But given the macroeconomic uncertainty we face now, it looks tough for growth stocks to achieve any meaningful rebound in their stock prices.”
Kakao Pay shares also suffered a double-digit decline on Friday, closing down 14.41 percent at 40,100 won per share.