Naver, Despite KOSPI's Lower Rise Rate, Retail Investors Send 'Love Calls'

Rising Ad Revenue Expected Amid Economic Recovery
Coupang Spurs Positive Reevaluation of E-commerce Sector

[Image source=Yonhap News]

[Asia Economy Reporter Minwoo Lee] Recently, despite NAVER's stock price underperforming the index growth rate, individual investors have been flocking to it. This is interpreted as a judgment that e-commerce value reassessment triggered by Coupang will take place, alongside expectations of increased advertising revenue due to economic recovery hopes.

According to the Korea Exchange on the 6th, individual investors have purchased a total of 116.6 billion KRW worth of NAVER shares since the beginning of this month until the previous day. It comfortably surpassed 'KODEX200 Futures Inverse 2X (95.9 billion KRW)' and Lotte Chemical (74.5 billion KRW), ranking first in net purchases by individuals. From the 24th of last month until the previous day, the stock price hovered between 370,000 and 380,000 KRW, declining by 2.6%, underperforming the KOSPI's 4.2% rise (based on closing price) during the same period, yet purchases continued steadily. Net buying continued for 12 consecutive trading days since the 19th of last month, setting the longest consecutive net buying record since April 2019.

The influx of investment sentiment is interpreted as stemming from expectations that strong performance will continue into the first quarter. In particular, the advertising segment, NAVER's largest revenue source, is expected to rebound. As COVID-19 social distancing measures ease and domestic economic recovery expectations grow, the online advertising market is recovering. Samsung Securities forecasted that NAVER's search platform revenue in the first quarter will reach 739.4 billion KRW. Both search advertising and display advertising are expected to grow, rising 14.7% compared to the same period last year.

Expectations for high growth in e-commerce were also reflected. As overall domestic consumption recovery was observed in the first quarter, NAVER's e-commerce revenue is also expected to increase. Korea Investment & Securities projected NAVER's commerce segment revenue to grow 42.5% year-over-year and 4.0% quarter-over-quarter to 329.5 billion KRW. Especially, expectations for corporate value reassessment following Coupang's listing have increased. Since Coupang, which shares the domestic e-commerce market with NAVER, was recognized with a corporate value of about 100 trillion KRW after its U.S. stock market listing, voices are emerging that NAVER's market capitalization (61.9273 trillion KRW as of the previous day) also requires a valuation commensurate with that.

Researcher Donghwan Oh of Samsung Securities stated, "Despite increased costs such as labor and marketing expenses this year, sales growth across all business divisions and strengthened anti-Coupang alliances with CJ and Shinsegae are expected to increase the value of the commerce business, so the stock price uptrend is expected to continue."

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