Kakao Games Halo Effect... Kakao and Netmarble Stock Prices Rise, Big Hit Also Gains Attention

Netmarble Catches the Wave of Subscription Frenzy
Big Hit Ahead of IPO Also Draws Attention

[Asia Economy Reporters Song Hwajeong and Oh Juyeon] Kakao Games, considered the biggest IPO of the second half of the year, is expected to set a record high subscription competition rate in the public offering, creating a sensation. Meanwhile, the ripple effects of Kakao Games' listing are also proving to be significant.

First, as the IPO frenzy makes it extremely difficult to secure subscriptions, investor sentiment is shifting toward related stocks that can benefit indirectly. During the SK Biopharm listing in July, the overwhelming demand for public shares spilled over to its holding companies SK and SK Chemicals, which also experienced a rally alongside SK Biopharm. Similarly, as the Kakao Games subscription frenzy took shape, the stock prices of Kakao and Netmarble, both shareholders, rose together over the past month.

According to the Korea Exchange on the 2nd, Kakao, which holds 58.96% of Kakao Games' shares, saw its stock price rise 18.49% from 343,500 KRW at the close on July 31 to 407,000 KRW on August 31. Notably, the intraday price surged to 420,500 KRW, marking a 52-week high. Netmarble, holding 5.63% of Kakao Games, also attracted investor attention. Its stock price jumped 30.08% from 128,000 KRW on July 31 to 166,500 KRW on August 31.

This resembles the pattern seen before SK Biopharm's listing on July 2, when SK and SK Chemicals rose sharply within a month. SK's stock price increased 28.45%, from 239,000 KRW on May 29 to 307,000 KRW on June 16. This trend continued throughout June. From June 1 to 25, individual investors net purchased about 580 billion KRW, more than double the 250 billion KRW net purchases in the previous month. The surge in buying was due to the imminent SK Biopharm listing. On the SK Biopharm public offering subscription closing day, net purchases exceeded 180 billion KRW, marking the largest scale in five years.

As a result, some investors suggest that instead of investing 100 million KRW in Kakao Games to receive only one or two shares, it might be better to look for alternative options. One investor said, "I considered taking out a negative balance loan to subscribe to Kakao Games, but if I only get one share, the interest burden would be heavier. It seems better to buy Netmarble instead."

However, some analysts argue that this spillover effect has already been reflected in the stock prices. For example, SK's stock price has fallen 30.29% from the closing price on June 16 since SK Biopharm's listing. On the subscription day for Kakao Games on the 1st, Kakao's stock fell 1.35% from the previous trading day, while Netmarble's stock rose more than 7% intraday but closed down 2.40%.

The success of Kakao Games has also increased interest in Big Hit Entertainment (Big Hit), another highly anticipated IPO candidate for the second half of the year. Big Hit passed the preliminary listing review on the 7th of last month and is expected to list in the fourth quarter.

According to the Big Hit company briefing released on the YouTube channel on the 13th, Big Hit recorded sales of 294 billion KRW and operating profit of 49.7 billion KRW in the first half of this year, achieving performance levels similar to last year despite the COVID-19 pandemic. Big Hit posted its highest-ever performance last year since its founding.

The market expects Big Hit's corporate value to exceed 3 trillion KRW. Shin Seungjin, a researcher at Samsung Securities, explained, "Big Hit's operating profit last year was 98.7 billion KRW, higher than the combined operating profit of the three major entertainment companies (SM, JYP Ent., and YG Entertainment), which totaled 84.8 billion KRW. Considering that the combined market capitalization of the three entertainment companies is about 3.1 trillion KRW, a corporate value exceeding 3 trillion KRW seems reasonable."

Recently, with BTS's new song topping the Billboard Hot 100 chart, expectations for Big Hit, BTS's agency, are expected to rise further. Billboard announced on the 31st of last month (local time) that BTS's "Dynamite" debuted at number one on the latest Hot 100 chart. The Hot 100 ranks the most popular songs in the U.S. weekly based on streaming performance, digital sales, and radio airplay. This is the first time a Korean artist has reached number one on this chart.

This content was produced with the assistance of AI translation services.