[Alpha Biz= Reporter Kim Sangjin] Meritz Securities projected on the 7th that Kakao's earnings for the third quarter of this year would fall short of market consensus.

The firm estimated Kakao's consolidated revenue for Q3 to be 1.9923 trillion won, a 1% decrease compared to the previous year, and an operating profit of 108.5 billion won, representing a 13% decline.

Meritz Securities noted that "most business divisions have not shown significant improvement compared to Q2, and the underperformance of listed subsidiaries has become more pronounced." They analyzed that Kakao Games has expanded its losses due to a downward cycle of existing games.

Additionally, they highlighted that Kakao Pay is expected to incur approximately 30 billion won in non-operating costs due to large-scale unresolved issues with Tmon and Wemaep.

The firm stated, "The lack of a clear business strategy has been the reason for Kakao's aimlessness over the past two years." They suggested that if investors resonate with the strategies for individual divisions, starting with advertising and artificial intelligence (AI) products in Q4 and extending to content in 2025, it could lead to a significant rise in stock prices.

They also advised that Kakao should actively promote potential shareholder return policies and operational improvements during the upcoming Q3 earnings announcement.

Meritz Securities maintained its "Buy" rating and set a target price of 51,000 won.

 

 

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