[Alpha Biz= Paul Lee] Global institutional investors have been selling their shares in SOOP (formerly AfreecaTV), especially since allegations of accounting fraud surfaced. Market participants interpret this as a negative signal.
According to the Financial Supervisory Service on Tuesday, Morgan Stanley & Co. International PLC (Morgan Stanley) reported on the 7th that its stake in SOOP decreased from 5.05% (579,987 shares) to 4.74% (545,226 shares). From February 6 to March 4, Morgan Stanley sold a net total of 34,761 shares (0.31%) of SOOP, alternating between buying and selling on the market.
Earlier in February, Morgan Stanley had also reported a reduction in its stake from 5.65% (649,999 shares) to 5.05%. On February 12, it sold 33,058 shares, significantly reducing its holdings from 588,565 shares to 555,507 shares.
SOOP's stock price saw a notable surge at the beginning of the year, reaching over 90,000 KRW, then jumping by more than 40% to the 120,000 KRW range in early February. This increase was attributed to events such as Sam Altman, CEO of OpenAI, visiting Korea (on February 4) and global broadcasts of popular female streamers (on February 1).
However, on February 10, news broke that SOOP was under investigation by the Financial Supervisory Service for potential accounting fraud, involving hundreds of billions of KRW. This caused the stock price to plummet, coinciding with the timing of Morgan Stanley's decision to reduce its holdings.
SOOP pays up to 90% of its advertising revenue to streamers and takes the remainder as a commission. The company had been using a gross method to report its revenue from game content advertising. Although SOOP acknowledged the investigation, it defended its practices, stating that it had no motive to inflate its revenue. Nonetheless, the stock price fell below 100,000 KRW by the end of February, and by the end of March, it had dropped to the 80,000 KRW range.
In a revised public disclosure last month, SOOP corrected its revenue reporting from the gross method to a net method. However, the company faced additional complications as the National Tax Service launched a high-intensity tax investigation into operators of harmful online content, such as "cyber room salons."
Nine operators, including BJ (broadcast jockeys) running "Excel broadcasts," were under investigation. In this type of broadcast, BJs engage in suggestive behavior based on viewer donations, publicly displaying sponsorship rankings like an Excel spreadsheet to encourage competition. This has raised concerns about a decline in advertiser trust and limited new viewer engagement, potentially affecting the platform's overall external risks.
Alphabiz Reporter Paul Lee(hoondork1977@alphabiz.co.kr)
