Kakao Pay Stock Price 'At Peak' Benefits Executives, While Employees Face Growing Losses Amid 'Sharp Decline'

[Asia Economy Reporter Lee Seon-ae] Recently, as KakaoPay's stock price plummeted, the estimated average evaluation loss of employee stock ownership (ESOP) per employee has approached 20 million KRW. Following the controversy over the management's large-scale stock sales, the deterioration of growth stock investment sentiment, and recently the impact of a block deal (large volume trading outside regular hours), the stock price has sharply declined below the IPO price of 90,000 KRW, putting the ESOP at risk of becoming a 'burden.'

According to the securities issuance performance report disclosed by KakaoPay on October 28 last year, just before its listing, the ESOP union was allocated a total of 3.4 million shares of KakaoPay at the IPO price of 90,000 KRW. Based on the 849 employees stated in the securities registration statement, it is calculated that each employee received an average of 4,005 shares. The stock valuation based on the IPO price is 360.45 million KRW per employee. The ESOP subscription rate was 100%, achieving a 'complete sell-out,' indicating strong enthusiasm among employees. While large IPOs such as KakaoBank (97.8%), SK Bioscience (97.8%), and LG Energy Solution (95.9%) generally had ESOP subscription rates in the 90% range, 100% was exceptional.

The ESOP valuation, based on the closing price of 85,100 KRW on the 10th, is 340.83 million KRW per employee on average. The current evaluation loss compared to the IPO price amounts to 19.62 million KRW.

In the early days of KakaoPay's listing, the stock price rose to more than twice the IPO price, resulting in ESOP valuation gains of several hundred million KRW. Applying the intraday high of 248,500 KRW recorded on November 30 last year, the ESOP valuation reached 994.99 million KRW, with gains exceeding 600 million KRW compared to the IPO price.

However, after the management caused controversy by selling a large volume of shares, KakaoPay's stock price began a significant decline. In early December last year, eight executives, including former CEO Ryu Young-jun, sold about 440,000 shares of company stock. They exercised stock options to acquire shares at 5,000 KRW each and sold them near the peak price of 204,017 KRW per share, realizing a total profit of approximately 87.8 billion KRW.

Subsequently, the stock price steadily declined due to overlapping negative factors such as the contraction of growth stock investment sentiment and the overhang concerns from the potential sale volume held by the second-largest shareholder, Alipay Singapore Holding. In particular, on the 8th, Alipay disposed of 5 million KakaoPay shares through a block deal (large volume trading outside regular hours), further fueling the stock price decline. Alipay secured a total of 467.5 billion KRW from this sale.

Jo A-hae, a researcher at Samsung Securities, explained, "This share sale has raised concerns about the overhang related to the remaining shares held by Alipay."

Following the 'block deal shock,' KakaoPay's stock price continues to show unstable trends. If the stock price decline widens, the ESOP evaluation loss will snowball. ESOP shares, which allocate 20% of issued shares to company employees during the IPO, have a lock-up period and cannot be sold for one year after listing. Therefore, KakaoPay employees cannot dispose of their locked-up shares before November 3, the first anniversary of the listing, regardless of stock price movements. Employees can realize gains by selling ESOP shares one month after resignation, but for those who received KakaoPay ESOP shares, resigning now would inevitably result in a loss. When acquiring ESOP shares, employees can borrow funds through Korea Securities Finance. Employees who purchased ESOP shares with loans inevitably face greater burdens due to the sharp stock price decline.

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