Photo: Kakao Games

 

 

[Alpha Biz= Kim Sangjin] Hyundai Motor Securities lowered its target price for Kakao Games from 19,000 KRW to 17,000 KRW on January 13. This marks a downward revision since the target price was set at 80,000 KRW in August 2022.

Hyundai Motor Securities forecasted Kakao Games' fourth-quarter 2024 performance, predicting a 16% decrease in revenue to 1.696 trillion KRW year-on-year, and a shift to operating losses of 9.5 billion KRW. This would be a significant earnings shock, falling far below the consensus operating profit of 2.8 billion KRW. The report pointed out that the lack of new mobile titles, weak PC game performance (with little impact from POE2), and poor other sales (diluted effect from new products and golf's off-season) are contributing to the decline.

The downgrade in the target price was explained as a reflection of the potential earnings shock in Q4 2024 and the lack of major new releases in the first half of 2025. Despite Kakao Games' efforts to cut operating expenses, such as efficiently managing marketing costs at 6% of revenue and terminating services for underperforming games, the company is facing insufficient top-line growth to result in significant profit improvement.

 

 

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