[Click eStock] "AfreecaTV, Advertising Platform Value Highlighted"

by Lee Jungyun

Published 18 Apr.2023 07:52(KST)

Korea Investment & Securities maintained a buy rating and a target price of 100,000 KRW for AfreecaTV on the 18th, stating that although advertising revenue in the first quarter of this year was temporarily sluggish, the value of the platform as an advertising medium is becoming more prominent.

[Click eStock] "AfreecaTV, Advertising Platform Value Highlighted"

AfreecaTV's revenue in the first quarter of this year is expected to be 73.3 billion KRW, down 2.6% year-on-year, and operating profit is forecasted at 19.4 billion KRW, a 16% decrease, in line with the consensus estimate of 19.1 billion KRW.

Platform revenue is estimated to have decreased by 2.7% to 58.4 billion KRW. A rebound in platform revenue, which had been sluggish following Google's payment policy changes in the second half of last year, is anticipated. Advertising revenue is expected to decline slightly by 1.6% to 13.9 billion KRW due to the combined effects of a weak advertising market and the off-season. Total operating expenses are projected to increase by 3.4% to 53.9 billion KRW but are expected to decrease compared to the fourth quarter of last year, which saw many one-time expenses.

Jung Ho-yoon, a researcher at Korea Investment & Securities, commented, "The possibility of Twitch withdrawing from the domestic personal broadcasting market is increasing, creating a positive industry environment for AfreecaTV," adding, "However, the stock price has not recovered due to the prolonged sluggishness of the platform business division since the second half of last year."

He continued, "The main reason for the stock price weakness was concerns that the foundation for long-term platform growth was collapsing as the number of paid users (PU) fell from 258,000 in the first quarter of 2022 to 219,000 in the fourth quarter of the same year," but added, "However, now that the negative impact of the payment policy changes has passed and earnings recovery has been confirmed, the stock price can also rebound."