[Alpha Biz= Paul Lee] Seoul, May 9, 2025 – NH Investment & Securities announced today that it has revised its target price for Kakao Corp. from KRW 53,000 to KRW 51,000, while maintaining a ‘Buy’ investment rating. The adjustment reflects downward revisions in earnings estimates and the recent decline in share prices of some Kakao subsidiaries, despite expectations of a gradual recovery beginning in Q1 2025.
Ahn Jae-min, an analyst at NH Investment & Securities, noted, “Kakao launched its new AI-powered messenger app, Kakana, yesterday. The company plans to revamp the KakaoTalk tab interface and officially enter the AI agent business through a partnership with OpenAI later this year. These changes are expected to drive increased user engagement and revenue growth.”
He added, “With factors such as the new government, potential interest rate cuts, and a supplementary budget, we anticipate an economic recovery in the second half of the year. This should support a turnaround in Kakao’s advertising and commerce businesses. Additionally, comebacks from SM Entertainment artists and new game launches from Kakao Games are expected to contribute to the recovery.”
For Q1 2025, Kakao reported revenue of KRW 1.86 trillion, down 6.3% year-over-year, and operating profit of KRW 105.4 billion, down 12.4%. “Operating profit was largely in line with our forecast of KRW 110.7 billion and the market consensus of KRW 105.9 billion, but overall results remained weak,” Ahn commented.
He further explained, “Advertising revenue growth was sluggish due to economic slowdown and political uncertainties. Meanwhile, the 'Other Platforms' segment, which had previously shown robust growth, underperformed. Content revenue also declined, with Kakao Games and the media division both underachieving.”
NH Investment & Securities expects Kakao’s Q1 results to mark the bottom, with gradual improvement projected through the remainder of the year.
Alphabiz Reporter Paul Lee(hoondork1977@alphabiz.co.kr)
