[Alpha Biz= Kim Eun-mi] Kakao is expected to continue improving its earnings, but concerns over the pace of its artificial intelligence (AI) business have led to a downward revision in its target stock price.

On April 14, Shinhan Securities maintained a “Buy” rating on Kakao but lowered its target price to KRW 75,000 from KRW 80,000. Kakao shares closed at KRW 47,000 in the previous session.

The brokerage estimates Kakao’s first-quarter revenue at KRW 1.98 trillion and operating profit at KRW 178.5 billion, representing year-on-year increases of 6.4% and 69.4%, respectively. The operating profit forecast is broadly in line with market consensus of KRW 181.5 billion.

Analyst Kang Seok-oh noted that strong growth is expected in the Talk Biz segment, driven by new features introduced on KakaoTalk. He added that the mobility business has also been delivering double-digit growth and improving profitability since last year, increasing its contribution to earnings alongside Kakao Pay.

However, uncertainty surrounding the timing of AI monetization remains a key overhang. “While enterprise-focused agent markets—such as those involving Codex and Claude Code—are already being monetized, the business-to-consumer (B2C) segment closely tied to everyday life is still in its early stages,” Kang said. “We have lowered the target price to reflect potential delays in commercialization and revenue generation.”

In the long term, AI agents are expected to become a key growth driver. Kang added that integrating AI into KakaoTalk-based services—such as food delivery, restaurant reservations, and travel—and seamlessly linking them to payments could enable Kakao to secure a leading position in the domestic market.

He also noted that expanded partnerships with major vertical players such as Musinsa, Olive Young, and The Hyundai Seoul could further accelerate share price recovery.

 

 

 

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