Krafton, the 'Daegangju', Loses Face as It Hits Record Low Prices Consecutively

Four Consecutive Trading Days of Record Low Prices
Over 25% Decline Compared to IPO Price
"Growth Stocks Affected by Unfavorable External Environment and Delayed Impact of New Releases"

[Asia Economy Reporter Minwoo Lee] Krafton, the leading company in the gaming industry, is continuously hitting record lows. Its stock price is not only below the IPO price but also lower than the lowest price recorded on the first day of listing last year. This is interpreted as a result of overlapping negative factors, including delayed normalization of new game sales and an unfavorable external environment for growth stocks due to interest rate hikes.

As of 11:13 AM on the 12th, Krafton's stock price stood at 371,000 KRW. Although it rose about 1.64% compared to the previous day, it still remains below the IPO price of 498,000 KRW and even below the lowest price of 400,500 KRW recorded on the first day of listing last year. During the previous day’s trading session, it hit an all-time low of 364,000 KRW. Since the 6th, it has consecutively broken its lowest price for four trading days, plummeting sharply. Due to this decline, its market capitalization ranking dropped to 20th as of the previous day's closing price.

The decline was particularly pronounced among major gaming stocks. Compared to the beginning of the year, it fell 20.7% as of the previous day, a steeper drop than other top gaming stocks by market cap such as NCSoft (-6.1%), Netmarble (-12.0%), and Pearl Abyss (-16.1%). Only Kakao Games (-20.1%), which faced intensified investor backlash due to large-scale stock sales by Kakao Pay executives, showed a comparable decline, expanding the negative impact to the entire Kakao group.

With the U.S. Federal Reserve’s hawkish stance continuing, along with rising U.S. Treasury yields and Nasdaq underperformance creating a negative environment for growth stocks, institutional investors’ sell-off is seen as a key factor. Krafton ranked 5th in net sales by institutional investors from December 29, after the ex-dividend date last year, through the previous day, totaling 237 billion KRW. Pension funds were particularly active sellers, ranking 4th with net sales of 110.7 billion KRW during the same period.

Additionally, the slower-than-expected normalization of sales for the new title “Battlegrounds: New State” also had an impact. Hyundai Motor Securities forecasted that Krafton’s Q4 2023 earnings would fall about 5% short of market consensus, projecting revenue of 601.2 billion KRW and operating profit of 239.5 billion KRW. The target price was also lowered by about 9% to 600,000 KRW.

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