[Click eStock] "Kakao, Growth Slowdown Inevitable Amid Economic Recession"

[Asia Economy Reporter Hwang Yoon-joo] Shinhan Investment Corp. evaluated Kakao on the 4th, stating that a slowdown in growth is inevitable due to the impact of the economic recession. The investment opinion 'Buy' and the target price of 70,000 KRW were maintained.

Kang Seok-oh, a researcher at Shinhan Investment Corp., commented on the third-quarter earnings, saying, "Due to macroeconomic factors, growth in Bizboard advertising and gift sales is slowing down," and added, "The Story and Media sectors also showed a significant decline in growth rate compared to previous years, raising concerns about top-line growth."

Kakao's third-quarter revenue recorded 1.8587 trillion KRW, up 6.8% year-on-year, while operating profit decreased by 10.6% to 150.3 billion KRW. The operating profit fell short of the consensus estimate of 179 billion KRW.

Researcher Kang forecasted, "With a high proportion of display advertising, the monetization of the Friends Tab Bizboard has not yet reached a normal trajectory, and there is still time before advertising diversification through Open Chatting, so the performance will be sensitive to the economy."

Kang explained, "Amid concerns about economic recession and demand decline, advertisers' budget cuts have already become noticeably apparent, and the decrease in users' ARPPU may also lead to a slowdown in gift transaction growth." He judged that the strategy to increase transaction volume by registering occasions other than birthdays, amid expected demand decline due to inflation, is unlikely to show meaningful results in the short term.

He further analyzed, "The game business, which had a high contribution to consolidated earnings due to high profit margins, is expected to remain sluggish until the next new release, as the base is high due to the performance of 'Odin' in Korea and Taiwan, and a sales rebound of 'Uma Musume' is unlikely."

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