LS Securities announced on October 15 that while the growth potential of Kakao's artificial intelligence (AI) services is positive, it will take time for these services to contribute significantly to revenue. As a result, the firm has lowered its target price for Kakao from 55,000 won to 42,000 won, while maintaining a 'buy' rating.
Sun Yoo-jin, a researcher at LS Securities, stated, "Concerns are growing over a gap in growth momentum due to delays in external commerce integration that were expected to occur within the year. The uncertainty regarding the appropriate corporate value following the spin-off also makes it difficult to anticipate a rebound in stock prices in the short term."
LS Securities also forecasts a slowdown in Kakao's growth for the third quarter of this year. The firm estimates that Kakao's consolidated revenue for the third quarter will increase by 0.2% year-on-year to 1.9664 trillion won, with operating profit expected to rise by 1.9% to 228.1 billion won. The operating profit margin is projected to be 11.6%.
By segment, the firm predicts that revenue from TalkBiz will reach 606.6 billion won, hindered by a decrease in advertising demand due to a lack of policy support. The content segment is also expected to decline by 9.0% year-on-year to 821.0 billion won, impacted by a market slowdown and reduced activity from major artists.
However, LS Securities views Kakao's recently announced personalized AI service strategy positively. At the 'if Kakao' event held on October 13-14, Kakao revealed plans to launch the KakaoTalk-based AI agent 'Kanana Space' and the PC-based agent platform 'Kanvas.'
Kanana Space is set to begin beta testing as early as December, while Kanvas aims for a launch in the first half of next year.
Sun noted, "This strategy leverages the strengths of a platform with the largest user base in the country," but cautioned that until the services demonstrate accuracy and utility, and their actual financial contributions are confirmed, a rebound in stock prices is unlikely.
* This article has been translated by AI.
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