Kakao Faces Unprecedented 'Outage' and Becomes Target of Short Selling

[Image source=Yonhap News]

[Asia Economy Reporter Minji Lee] On the first day of the stock market opening after the KakaoTalk outage incident, Kakao was hit by a massive short-selling attack.

Short selling is an investment technique where investors borrow shares they do not own and sell them to gain profits, typically targeting overvalued stocks.

According to the Korea Exchange on the 23rd, on the 17th of this month in the KOSPI market, the short-selling volume of Kakao was 1,416,977 shares, the highest among all KOSPI 200 stocks eligible for short selling. The short-selling transaction amount on that day also ranked first in the KOSPI market at 67.38563 billion KRW.

The single-day short-selling volume for Kakao on the 17th was the largest since May 3 of last year, when short selling, which had been completely banned during the COVID-19 pandemic, began to be partially reinstated.

The stock with the second-highest short-selling volume on the 17th was Kakao Bank, a Kakao affiliate, with 1,124,745 shares sold short. The daily transaction amount was 18.37319 billion KRW, ranking fourth after Samsung Electronics (37.45106 billion KRW), SK Hynix (32.03528 billion KRW), and LG Energy Solution (23.86029 billion KRW).

Expanding the period to the past week (17th?21st), Kakao Bank (3,547,627 shares) and Kakao (3,431,658 shares) ranked first and third respectively in short-selling volume. Samsung Electronics (3,477,923 shares) ranked second by quantity, but the short-selling ratio relative to total trading volume was 4.99%, while Kakao Bank (19.02%) and Kakao (12.20%) had overwhelmingly higher short-selling ratios.

Securities experts view that the recent data center fire will increase regulatory risks from the government. Hyunyong Kim, a researcher at Hyundai Motor Securities, pointed out, "Since a single platform operator monopolizes multiple internet services, the damage area was quite extensive, highlighting concentration risk," adding, "As the monopolistic harms of the platform industry are being discussed, comprehensive regulatory pressure is increasing, creating a burdensome situation."

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