Naver dropped 18.44% this year alone
Yahoo Line securities industry downsizing
“It is unlikely to be a major downside risk to the stock price.”
Enlarge photo of Naver headquarters. [사진 출처 = 연합뉴스]
Naver’s stock price, once ranked third in KOSPI market capitalization, continues to fall. Naver, which is in a fierce battle for market share with Chinese e-commerce companies such as AliExpress and Temu, saw its stock price fall by more than 18% this year alone. Recently, there has been a double negative factor of Line Yahoo’s share reduction, but some in the securities market believe that the drop in stock prices is excessive.
As of 9:30 am on the 26th, Naver is trading at 182,900 won, an increase of 200 (0.10%) from the previous day.
The day before, Naver closed trading at 182,700 won, down 18.44% this year alone. Naver’s KOSPI market cap ranking rose to 3rd place at the end of July 2021, but the position changed as interest rates rose. Investment sentiment towards growth stocks began to freeze and sink, with the stock falling from 8th in market cap at the end of last year to 10th now.
Recently, as Chinese e-commerce is rapidly expanding its market share, the negative observation that Naver’s position will be reduced seems to add to the negative news. WiseApp·Retail·Goods, an app and retail analytics service, estimated Temu’s first quarter payout amount at 91.1 billion won. Monthly, it jumped 453% in just 7 months from 1 billion won in August last year to 46.3 billion won in March.
However, the securities industry is of the position that it remains to be seen whether the aggressive actions of Chinese trading platforms will continue for a long time. In fact, AliExpress’s sales fee exemption promotion is known to run until June.
In the case of Naver, despite the slowdown in the advertising and e-commerce industry, it shows a steady profit growth of more than 10%, so the stock market indicates that the current stock price reflects concerns too much.
Photo enlargement line application. [사진 출처 = EPA 연합뉴스]
The judgment of securities companies is similar in reducing Yahoo’s Line stake, which is one of the new issues emerging. Naver, which launched its Line service in Japan in June 2011, is currently embroiled in a management rights dispute as the Japanese government cracks down on its over-reliance on Yahoo’s Line.
The most disappointing thing about selling Yahoo’s Line shares is missing out on Naver’s high growth potential in the future. Unlike Korea, Japan’s digital advertising accounts for less than half of the total advertising market, at 43.5%. Japan’s e-commerce penetration rate in 2020 is only about 9.1%.
The explanation is that since a low penetration rate means high future growth potential, the company will miss out on the future growth benefits of the Japanese Internet market.
In the securities world, the recent drop in stock prices is assessed as excessive.
Since Line Yahoo’s performance and stock price are currently sluggish, the analysis is that Naver will not lose much if it loses control rights in Line Yahoo in the future. In fact, Yahoo’s Line advertising growth rate last year fell below 5%, and the amount of trade transactions, excluding peer-to-peer (C2C) transactions and services, shows negative growth.
Jeong Ho-yoon, a researcher at Korea Investment & Securities, said, “In the short term, given the analog characteristics of Japanese society and the poor performance and stock price of Line Yahoo, if it can be sold at an appropriate price, it is not expected to be a downside risk significant to Naver’s current stock price “I’m doing it,” he said.
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