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By Lee Min-hyung
Shares of Naver and Kakao ― two of the nation's biggest digital platform companies ― have seen their respective stock prices move in contrasting directions due to their earnings forecasts.
After bottoming out in late April, the stock price of Naver ― the dominant web portal operator here ― has displayed sharp growth for the past few weeks. But this was not the case for Kakao whose valuation is showing little sign of rebounding amid the firm's pessimistic earnings outlook, according to market analysts.
Earlier, Naver reported a better-than-expected operating profit of 330.5 billion won ($246.75 million) during the first quarter, up 9.5 percent from the previous year. The company is also forecast to improve its earnings record for the next quarter as well on the overall growth of its diverse business activities ― comprising e-commerce, fintech and content, analysts said.
"Naver's shopping advertisement profit will be on a gradual rise with increased ad sales revenue from Poshmark (which Naver acquired in October 2022) and revenues from its partnership with Yahoo Japan," said Lee Chang-young, a Yuanta Securities analyst.
The analyst cleared away lingering market concerns regarding Naver losing its market share to ChatGPT.
"Naver's Korean-specialized artificial intelligence (AI) search service ― which will make its debut this summer ― is expected to dispel concerns over its rivalry with ChatGPT," the analyst said.
Naver's stock price hit a three-month low of around 186,000 won per share later last month, but recovered to more than 210,000 won as of Monday.
Unlike Naver's recovery momentum, shares of Kakao ― the nation's largest mobile platform operator ― are still showing no clear signs of bouncing back.
This lackluster performance was triggered by weakened investor confidence after the company reported dismal earnings in the first quarter. Kakao reported an operating profit of 71.1 billion won between January and March, down 55 percent from the previous year.
Analysts attributed the weak earnings to the firm's sluggish ad revenue business growth and increased investment in AI-powered cloud computing and other data-related infrastructures.
"Kakao's first-quarter earnings exhibited a weaker-than-expected result due to its poor ad business performance and more expenditure on investments," Kim Jin-goo, an analyst at Kiwoom Securities, said. "The company may be under downward pressure in terms of its profit growth until the second quarter for a similar reason."
Kakao's stock price also fell to a three-month low of around 55,500 won per share in late April, but failed to achieve a rebound. Kakao shares slightly recovered to more than 56,000 won per share on Tuesday.
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