Despite Falling Stock Prices, Retail Investor Sentiment Surges in Internet Platform Stocks

After Year-End Ex-Dividend, Individual Net Buying Focuses on Naver and Kakao
Shares Fell Over 30% Since Second Half of Last Year
Buying Sentiment Concentrates on Bottomed Stock Prices

[Asia Economy Reporter Minwoo Lee] Individual investors are flocking to internet platform stocks such as Naver (NAVER) and Kakao. Given that their stock prices had been declining for about half a year, it is interpreted that investors judged the stocks had hit the 'bottom' and began buying at low prices.

According to the Korea Exchange on the 5th, individual investors have net purchased Naver and Kakao stocks worth 345.4 billion KRW and 210.7 billion KRW respectively from the 29th of last month, after the ex-dividend date, until the day before. This corresponds to the 2nd and 4th highest net purchases by individual investors during the period. Before the ex-dividend date, individuals had been selling stocks daily, but after the ex-dividend date, they bought 3.9742 trillion KRW worth of stocks on the KOSPI alone, with Naver and Kakao accounting for about 14% of that amount.

In particular, despite the stock prices of the two companies declining over about half a year, investor sentiment remained strong. Since the second half of last year until the day before, Naver's stock price fell by about 12.5%, and Kakao's by about 31.6%. This significantly exceeds the KOSPI's decline of 9.3% during the same period. Compared to their respective peaks on July 26 (Naver, 465,000 KRW) and June 24 (Kakao, 173,000 KRW), the stocks have dropped by 21.4% and 35.5%, respectively.

Due to the activation of non-face-to-face services amid COVID-19, the advertising and commerce sales of the two companies surged, leading to a rapid increase in sales in 2020. However, concerns that growth would slow from last year caused their stock prices to underperform. In fact, both companies are expected to report earnings below market expectations in the fourth quarter of last year. Hana Financial Investment forecasted that operating profits for both Naver and Kakao would fall short of market consensus due to increased labor and marketing costs.

As both companies are aiming for a rebound this year through new growth engines, individual investors seem to have judged the recent decline as the 'bottom' and started buying at low prices. In Naver's case, the content business segment, which includes core new businesses such as Naver Webtoon, Snow, and Zepeto, is expected to continue high growth this year following last year. Kakao's major subsidiaries, including entertainment and mobility, are also showing growth rates exceeding the overall company growth. Yoon Yeji, a researcher at Hana Financial Investment, predicted, "The catalyst for Naver's earnings rebound this year is content, and Kakao is also expected to experience rapid growth centered on content and mobility."

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