'Untact Leader' Naver Aims for Revival

Foreign Investors Bet on Stock Price Rise... Net Purchase of 223.4 Billion Won in One Month

[Asia Economy Reporter Geum Bo-ryeong] Although NAVER's stock price has shown sluggish performance, market attention is focused on the still attractive investment points remaining.

According to the Korea Exchange on the 16th, NAVER's stock price closed at 292,500 KRW the previous day, down 2.01% (6,000 KRW) from the previous session.

As the novel coronavirus infection (COVID-19) spread, NAVER, regarded as a leading non-face-to-face (untact) stock, saw its closing price rise 135% from 144,000 KRW on March 19 to 339,000 KRW on the 3rd of last month. Considering the KOSPI's rise of 64.37% during the same period, this is more than double.

However, since early last month, NAVER's stock price has struggled to gain momentum. One factor was the fine imposed by the Fair Trade Commission. On the 6th of last month, the FTC fined NAVER 1 billion KRW for abusing its market-dominant position to obstruct Kakao from accessing real estate listing information. On the 6th as well, the FTC imposed a fine of 26.7 billion KRW on NAVER for manipulating search algorithms. As investment sentiment weakened, the stock price fell 7% from the 7th of last month to the previous day.

Foreign investors have been betting on NAVER's rise. Among the top four stocks with the highest net foreign purchases over the past month from the 16th of last month to the previous day across both the KOSPI and KOSDAQ markets, NAVER ranked fourth. During this period, foreign investors net purchased NAVER shares worth 223.4 billion KRW.

A business alliance with CJ Group could act as a positive catalyst. On the 14th, NAVER announced it is "reviewing various strategic options for business growth" regarding a sudden content-commerce partnership with CJ. Researcher Joo Young-hoon of Eugene Investment & Securities explained, "From a commerce and logistics perspective, NAVER Shopping could be a good strategy to solve delivery concerns," adding, "From a content perspective, if NAVER's subsidiary 'Studio N' combines its planning and production capabilities with Studio Dragon, it could produce high-quality works."

Third-quarter earnings are also expected to grow double digits. Kyobo Securities estimates NAVER's third-quarter revenue at 1.9957 trillion KRW and operating profit at 279.9 billion KRW, representing increases of 19.9% and 38.5% year-on-year, respectively. The performance-based advertising and business platform including shopping search, which were fully introduced from the third quarter, drove the results. With the Line-Yahoo Japan management integration, excluding Line's performance from NAVER's consolidated revenue after the third quarter, an improvement in operating profit is also expected.

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