KB Securities has reduced its target price for Kakao by 32% to 39,000 won, reflecting a slowdown in revenue growth from its TalkBiz segment and a discount on the value of its subsidiaries ahead of a planned spin-off. The investment rating remains at 'buy.'
Research analyst Lee Ji-eun stated in a report that Kakao is expected to report third-quarter revenues of 2.02 trillion won and operating profit of 236.3 billion won, falling short of market consensus.
The primary reason for the disappointing performance is attributed to the slowdown in growth of its platform business. Lee noted, "The slowdown in the platform business, which has driven overall performance growth, is a key factor. TalkBiz revenue is projected to reach 624.7 billion won, with a deceleration in growth compared to the previous quarter."
Additionally, she mentioned that the mobility segment is likely to be affected by seasonal downturns due to an increase in holidays, while the content sector is expected to continue its poor performance. Notably, SM Entertainment, which had previously shown strong results, is anticipated to experience a slowdown in growth due to reduced activities from major artists.
However, Lee pointed out that Kakao recently unveiled its direction and monetization strategy for its AI agent business through 'if kakao 2026.' She expressed optimism that leveraging the existing KakaoTalk user base could significantly enhance overall profitability if monetization efforts gain traction.
* This article has been translated by AI.
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