Kakao shares soar after 5-for-1 stock split

Kakao headquarters on Jeju Island / Yonhap

By Lee Min-hyung

Kakao shares finished sharply higher, Thursday, when trading resumed of stocks issued by the nation's leading mobile platform operator after its 5-for-1 stock split.

The stock price of Kakao closed at 120,500 won ($107.82), up 8,500 won or 7.59 percent from the previous session. Trading of Kakao shares was suspended for three days from Monday due to its stock split.

Kakao's stock value remained in the doldrums for years until early 2020. But it has since been on a steep rise throughout last year when big tech stocks here and abroad flourished amid pandemic-sparked changes, such as telecommuting and online purchases.

The strong investor response following the stock split enabled Kakao to become Korea's fifth-largest company by market capitalization as of Thursday, surpassing Hyundai Motor and Samsung Biologics.

In February, Kakao decided to divide existing stocks into multiple new ones as part of efforts to keep boosting share volume in the local stock market. Kakao shares set a new high by closing at 558,000 won on April 9, the last trading day before the firm's stock split. The company considered the growth too rapid, as the stock price has more than quadrupled in less than a year.

Samsung Electronics also carried out a 50-for-1 stock split in 2018 amid its surging stock price.

Market analysts expected Kakao's stock value to keep rising on the rosy growth outlook of its platform subsidiaries in areas such as mobile payment, mobility service, internet banking and e-commerce.

“We revised up our target stock price of Kakao to 152,000 won per share, up 15 percent from our previous target, as the firm's platform valuation will continue to rise,” Sung Jong-hwa, an analyst at eBest Investment & Securities, said.

Two Kakao subsidiaries ― Kakao Pay and Kakao Bank ― plan to go public on the local stock market this year and their combined valuation after the initial public offerings is expected to exceed trillions of won, which will help drive up Kakao's stock price as well, according to the brokerage firm.

The outlook also remains upbeat for an additional rally of Kakao shares following recent news that Dunamu, the operator of the nation's largest cryptocurrency exchange Upbit, is pushing to be listed on the New York Stock Exchange (NYSE). Kakao holds a combined 21.3 percent stake in Dunamu.