[Click eStock] "AfreecaTV Gains from Twitch's Streaming Quality Controversy... No Price Burden Either"

[Asia Economy Reporter Lee Myunghwan] Korea Investment & Securities announced on the 6th that it maintains a buy rating and a target price of 100,000 KRW for AfreecaTV. This is due to the expected indirect benefits from the streaming platform Twitch's video quality controversy and the fact that the valuation is also at a bottom level.

Korea Investment & Securities forecasts AfreecaTV's Q3 revenue this year to be 78.2 billion KRW, a 10% increase compared to the same period last year, and operating profit to be 22.8 billion KRW, a 1.5% decrease.

By segment, platform revenue is expected to be 57.6 billion KRW, a 4.3% increase year-on-year. However, this is a 1.2% decrease compared to the previous quarter. Korea Investment & Securities analyzes that the change in Google's in-app payment policy in Q3, which made it impossible to purchase Star Balloons on Android apps, is expected to cause light user churn and slow platform revenue growth. Advertising revenue is estimated at 19.5 billion KRW, a 34.6% increase year-on-year, due to the continued high growth of brand content advertising, which is less affected by economic cycles compared to other platforms.

Korea Investment & Securities diagnoses that AfreecaTV could benefit indirectly from the recent controversy over Twitch's reduction of maximum video quality. Twitch has lowered its video quality to 720p in South Korea since the 30th of last month in response to the National Assembly's push for legislation mandating network usage fees for global content platform operators.

Korea Investment & Securities analyzes that Twitch's video quality downgrade could serve as an opportunity for AfreecaTV, as video quality is an important competitive factor for personal broadcasting platforms. However, it is judged that this video quality issue will not immediately translate into benefits for AfreecaTV. This is because the main broadcast genres, user composition, user atmosphere, and culture of the two platforms are generally different, and individual broadcasters (BJs) find it difficult to switch platforms in the short term. Nevertheless, if the situation prolongs, it could have a sufficiently positive impact, according to Korea Investment & Securities.

It also pointed out that AfreecaTV's valuation is low, forming an affordable price range. Researcher Jeong Hoyoon of Korea Investment & Securities advised, "The decrease in payment users (PU) due to Google's payment policy change will be fully reflected in Q3. From Q4, there are events such as the Qatar World Cup that could positively affect user indicators, so it is advisable to approach with a buy perspective at the current valuation bottom."

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