[Into the Stocks] Stock Rollercoaster on New Releases... Should You Buy or Sell Kakao Games?

[Asia Economy Reporter Myunghwan Lee] Kakao Games' stock price has been fluctuating sharply like a roller coaster day after day. The stock price volatility reflects both investors' expectations and disappointments before and after the release of a new title. The views of the securities industry on Kakao Games, which launched the new game, also vary.

Kakao Games released its new mobile game, "Uma Musume: Pretty Derby" (hereafter Uma Musume), on the 20th. Uma Musume is a game where players raise girl characters inspired by real Japanese racehorses and compete in races. Despite being a somewhat unfamiliar genre as a bishoujo (beautiful girl) game, it got off to a smooth start by ranking first in both the App Store's popularity and sales rankings from the first day of release.

However, the stock price of Kakao Games, which handled the distribution, showed large fluctuations before and after the release, indicating a bumpy ride. On the release day, the 20th, concerns about the game's success grew as the App Store download ranking was delayed, causing the stock to plunge 10.14%. On the following day, the 21st, the news of reaching number one on the App Store caused the stock to surge 10.50%, but it gave back the gains by closing down again by about 9% on the 22nd. Although it is still early in the release, the market appears to be reacting sensitively to performance-related indicators.

There is no disagreement in the securities industry that Uma Musume, which achieved the initial goal of ranking first on the App Store, will be a hit. However, forecasts for Kakao Games' second-quarter earnings are divided. Hyundai Motor Securities expects the company to post an operating profit of 63.8 billion KRW in the second quarter, breaking its record high due to the impact of sales in Taiwan of its flagship title "Odin." On the other hand, Ebest Investment & Securities considers the market's expectations for the second-quarter earnings to be excessive, citing delays in the release of Uma Musume and other reasons.

Analyses of the appropriate stock price also differ. Daol Investment & Securities upgraded its investment opinion from "Buy" to "Strong Buy," citing excessive price decline and expectations for additional new titles. Ha-jeong Kim, a researcher at Daol Investment & Securities, analyzed, "Both new title sales, second-quarter earnings this year, and prospects for additional new titles are bright." In contrast, Hyundai Motor Securities lowered its target price by 10%, citing the possibility of listing its subsidiary Lionheart Studio, which developed the flagship title Odin. Hyun-yong Kim, a researcher at Hyundai Motor Securities, predicted, "The listing of a core subsidiary will inevitably lead to a discount on the parent company's stock price."

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