Sale of Loss-Making Subsidiaries and AI Hopes: Will Kakao’s Share Price Gain Momentum?

[Financial News] Kakao’s share price, which had been sluggish, is showing signs of a rebound this year. Analysts expect Kakao to improve its profitability by selling loss-making subsidiaries and delivering results in artificial intelligence (AI).
According to the Korea Exchange (KRX) on the 14th, Kakao closed at 57,400 won the previous day, down 1,400 won (2.38%) from the prior session.
Kakao’s stock has been weak over the past few years. It climbed above 170,000 won in 2021, but plunged to the 30,000-won range in 2024.
Buoyed by the strong domestic stock market, the share price recovered part of its losses last year, but the uptrend has stalled again this year. From the start of the year through the 13th, the Korea Composite Stock Price Index (KOSPI) rose 30.68%, while Kakao’s share price fell 4.49%.
Even so, brokerages are focusing on Kakao’s improving profitability this year. On a consolidated basis, Kakao posted record results last year with revenue of 8.0991 trillion won and operating profit of 732 billion won, and many expect this growth to continue in 2024.
Oh Dong-hwan, an analyst at Samsung Securities, said, “With the sale of the healthcare business in the fourth quarter of last year, about 10 billion won in quarterly operating losses was reclassified as loss from discontinued operations. If the ongoing share swap with AXZ and Upstage is completed, related losses are also expected to be excluded from consolidated earnings,” adding, “As Kakao Games and Kakao Entertainment are also reportedly under review for sale, further profitability improvement through restructuring is anticipated.”
He went on, “The company has set a target of around 10% revenue growth and a 10% operating margin for this year, backed by strong growth in its platform segment,” and predicted, “Assuming robust growth in messaging ads, payments and mobility, along with additional sales of content subsidiaries, those targets look achievable.”
Most brokerages have set their target price for Kakao in the 70,000–80,000 won range, while Kiwoom Securities has issued a target of 110,000 won. Kiwoom raised its target price last November and has maintained it since, naming Kakao its top pick in the internet sector.
Kim Jin-gu, an analyst at Kiwoom Securities, noted, “As the AI era begins in earnest, Kakao’s investment appeal is very high because it can sustain solid growth,” and pointed out, “Kakao has forged a strong partnership with OpenAI, which is leading the transformation, and during its recent earnings conference call it also announced a strategic partnership with Google.”
He added, “As growth in key verticals such as payments and mobility accelerates, Kakao’s quarterly operating profit is expected to stably exceed 200 billion won this year, marking a visible step up from last year.”

jisseo@fnnews.com Reporter Seo Min-ji Reporter