Naver shares tank as AliExpress lures shoppers

Naver shares continue to slide in the face of growing e-commerce threats from AliExpress whose ultra-cheap sales strategy is feared to steal more shoppers away from its online retail platform, according to industry analysts, Monday.

Investors' woes have escalated in recent weeks after the Chinese e-commerce firm displayed its aggressive intention of expanding investment here. Shares of Korea's largest internet platform operator were traded at around 220,000 won ($165) per share earlier this year, but have since shown an unstable downward trajectory amid falling investor sentiment triggered by AliExpress' growing presence here.

The analysts attracted Naver's falling valuation to the pessimistic outlook on the firm's commerce business.

"Major brands and sellers that sold products from Korea's major open markets — such as Naver and Coupang — have enough reason to shift their sales channels to the Chinese platform which charges them no commissions," said Lim Hee-seok, an analyst at Mirae Asset Securities.

Unless Naver cuts its commission on sellers drastically, there is no clear breakthrough for Korea's major retail platform operators to put the brakes on sellers joining their Chinese competitor, according to him.

Naver's huge reliance on commerce also heightens investors' worries. According to the firm's regulatory filing, sales from the business accounted for 26 percent of its total in 2023.

Hit by prevailing pessimism, Naver's share price extended a losing streak on Monday with a fall of 1.07 percent from the previous trading day. It closed at 184,100 won per share, according to data from the Korea Exchange.

“Chinese e-commerce firms — such as AliExpress and Temu — are projected to have chalked up combined annual sales of 3.3 trillion won last year, but the figure is forecast to surge to over 19 trillion won by 2026,” the analyst said. “Major Korean platform firms, including Naver, will inevitably be affected by the rise of the Chinese rivals.”

The brokerage cut down Naver’s target stock price from 310,000 won to 260,000 won. Other brokerages are also on track to issue negative stock forecasts on the internet firm. Daol Investment & Securities slashed its figure down to 300,000 won from 320,000 won.

The surprising pace of Chinese firms’ growth here also comes as a major fear factor to Naver investors, according to Chung Ho-yoon, an analyst at Korea Investment & Securities.

“The rapid rise of Chinese overseas direct purchase platforms has emerged as a major concern to Naver investors at a time when the Korean firm is moving to garner more efforts to rev up sales from its commerce business,” he said.

According to data from the brokerage house, the average quarterly direct purchases for goods from China amounted to 130 billion won here in 2018, but the figure soared to 1 trillion won as of the fourth quarter of 2023.