[Beginner's Guide] The Fallen People's Stock Nekaoh... Will It Rebound This Year?

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[Asia Economy Reporter Kwon Jaehee] NAKAO (Naver + Kakao), which plunged more than 50% just last year.

Recently, the stock prices of Naver and Kakao have been showing unusual signs.

This year, Naver has risen about 12%, and Kakao about 20%.

Can they regain their reputation as the 'national stocks'?

What was the background for growth stocks NAKAO rising to 2nd in market capitalization?

Did you know that Naver (NAVER) and Kakao once ranked 2nd and 3rd in market capitalization?

It was around this time that they earned the title of 'national stocks.'

Naver and Kakao are stocks loved by individual investors as much as Samsung Electronics.

Last year, Naver and Kakao ranked 2nd and 3rd respectively among the top 10 stocks most net purchased by individual investors.

Individual investors net purchased a total of 3.4463 trillion KRW worth of Naver and 2.2627 trillion KRW worth of Kakao last year.

Naver and Kakao are representative 'COVID-19' beneficiary stocks.

As untact services became active amid the COVID-19 pandemic, their stock prices surged rapidly.

During the height of COVID-19 in 2021, Naver's stock price soared, reaching a peak of 465,000 KRW on July 26, 2021.

Kakao also recorded a high of 173,000 KRW on June 24, 2021.

NAKAO plunged 50% last year... Tears of retail investors

The relentless rise of Naver and Kakao's stock prices was halted last year as central banks around the world, led by the U.S. Federal Reserve (Fed), implemented interest rate hikes.

Naver fell about 44% from its peak last year, and Kakao dropped about 52%.

Once competing for 2nd and 3rd in market cap, Naver and Kakao's stock prices plummeted sharply, falling to 7th and 11th place respectively.

Will NAKAO soar this year?

This year, Naver has risen about 12%, and Kakao about 20%.

Based on the intraday lows in October last year, Naver has increased about 25.8%, and Kakao about 33.1%.

So, can Naver and Kakao maintain this favorable stock price trend this year?

The securities industry offers mixed forecasts.

Some believe that Naver and Kakao will continue their current stock price uptrend, while others view it as uncertain whether this rise will lead to a 'major trend reversal.'

Sohee Kim, a researcher at Hanwha Investment & Securities, analyzed, "Currently, Naver's stock price is at a bottom with limited possibility of further decline. We forecast Naver's sales growth rate at 16.4% this year, but improving profitability through cost reduction is key."

Kim also explained about Kakao, "The recovery of the Talk Biz business is crucial for this year's performance. We judge that the increase in user dwell time through KakaoTalk profile tab updates and the rebound in advertising revenue are highly likely."

Jaemin Ahn, a researcher at NH Investment & Securities, predicted, "Kakao's business is still on course and will show solid performance growth this year."

On the other hand, there is also a view that this favorable stock price trend is difficult to see as a trend reversal.

Since the interest rate cut period is expected to be at least 2024, and the possibility of monetary policy easing such as rate cuts this year is low, the environment remains unfavorable for growth stocks.

Jaehyun Kang, a researcher at SK Securities, said, "It has been a year since tech growth stocks have been in a downtrend, and from a price perspective, it looks like an attractive time to buy. However, the background of the tech stock decline includes not only tightening and rising interest rates but also corporate excess, so it is still early to fully buy tech growth stocks."

This article is from [Beginner's Guide to Stock Investing], published weekly by Asia Economy. We explain stock-related financial news and difficult economic stories in an easy and friendly way so that stock beginners can understand. By clicking subscribe, you can receive articles for free.

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