Krafton becomes largest market cap game company on KOSPI

Krafton ranked 20th largest market cap company on KOSPI

By Anna J. Park

Despite rather lukewarm movement of Krafton's stock price on Tuesday, the developer of the global mega-hit game, “PlayerUnknown's Battlegrounds,” secured the top position in terms of market cap among the local game companies listed on the KOSPI.

Krafton's debut on the country's benchmark KOSPI index on Tuesday started at the initial price of 448,500 won ($390), 9.9-percent lower than the subscription price of 498,000 won. On the Korean stock market, the initial price of a newly offering stock can range from 90-percent to 200-percent of its subscription price, depending on the demand for the stock at the start of trading session.

Since the initial price was formed at the 90-percent level of the subscription price, the stock price nosedived to 400,500 won at 9:03 a.m., its lowest point during daily trading. However, the price soon skyrocketed to 480,000 won at around 9:10 a.m., followed by continual fluctuations, mostly ranging between a three-percent decrease and a two-percent increase of the initial price.

The price finished at 454,000 won, a 1.23-percent increase, mostly led by retail and institutional investors' net buying. Retail investors and institutional investors each net-purchased 295 billion won and 231 billion won worth of stocks, while foreign investors net-sold 378 billion worth of stocks on the first day of Krafton's trading. The National Pension Service (NPS) ― Korea's largest institutional investor, with its assets under management (AUM) being at over 830 trillion won ― was one of the strongest buying institutions of Krafton stocks on Tuesday.

Despite the tepid movement of the stock on the first day, Krafton has become the largest game company listed in Korea, with its market cap reaching 22.1 trillion won, surpassing the market cap of NC SOFT ― the previous top game company in Korea ― standing at 17.8 trillion won.

Analysts say that one of the key reasons behind the stock's unenthusiastic movement on its first day is the huge amount of stock Krafton had available on the market. Nearly 40 percent of Krafton's stocks were available to be traded from the first day, which is a lot higher than that of other recent IPO stocks, such as KakaoBank at 22.6 percent, SK IET at 15.04 percent and SK Bioscience at 1.63 percent.

Krafton's “PlayerUnknown's Battlegrounds” / Courtesy of Krafton

However, analysts believe that the global game company's solid performance ― of earning 773.9 billion won in operating profit last year, with an annual revenue of 1.67 trillion won in 2020 ― is expected to buttress the stock's robust upward movement in the following months. Krafton's flagship game's presence is also growing rapidly in emerging markets like India, the Middle East and North Africa, with its latest mobile version drawing more than 34 million cumulative users in a week, following its launch in early July.

“Battlegrounds is one of the most successful games in history, in countries of both the East and West. If its latest mobile version of 'New State' is successful as well, the stock price's upward movement is expected,” said Kim Dong-hee, a researcher at Meritz Securities, suggesting a target price of 720,000 won.

Kim Jin-gu, a researcher at KTB Investment & Securities, suggested 580,000 won as its target, given Krafton's abundance in intellectual property. But Kim added that derivative works based on the game's originality need more confirmation to be positively reflected in the market.