Kakao shares drop after outage, but recover later in the day
Four listed Kakao companies — Kakao, Kakao Pay, Kakao Bank and Kakao Games — plummeted following a service outage over the weekend caused by a fire at a data center in the SK C&C building in Pangyo, Gyeonggi.
Kakao fell 5.93 percent to 48,350 won ($33.7) in trading Monday.
The messenger app operator fell 9 percent right after the market opening, touching a new 52-week low of 46,800 won ($32.50) intraday.
Kakao had been hitting new yearly lows one after the other amid rising interest rates, before rebounding on Friday by 8.67 percent to 51,400 won. That was almost wiped out by the disaster-related retreat on Monday.
The stock is down 58 percent this year.
Kakao Pay touched a record low of 32,450 won in the morning, before closing at 34,600 won, down 4.16 percent.
Kakao Bank fell 5.14 percent to 16,600 won. It traded at a record-low 15,950 won at 9:05 a.m.
Kosdaq-listed Kakao Games declined 7.97 percent to 35,200 won right after the open, and rebounded to 34,700 won, down 2.22 percent.
Kakao said in an electronic disclosure Monday that the incident “will have a limited financial impact on Kakao and its major subsidiaries” revenue-wise, and that the company “will discuss compensation for damages with SK C&C after the services are normalized.”
Analysts forecast the service outage will cost the company between 12 billion won and 22 billion won.
“The impact of the service outage on the company’s revenues will largely come from sales lost during the halt and user compensation,” said Oh Dong-hwan, senior analyst at Samsung Securities, forecasting a maximum 1 to 2 percent decline in the quarterly revenue for Oct.-Dec. period.
Kim Jin-woo, analyst at Daol Investment and Securities, said that “if recipients of compensation are limited to paid users, it is expected to have a 12-billion-won impact on the company’s operating profit.”
KB Securities analyst Lee Sun-hwa expects the damage to reach 22 billion won, which is the company’s daily revenue forecast for the fourth quarter this year.
“Stock prices of Kakao and its subsidiaries have been declining since last year, and the public sentiment surrounding Kakao has turned sour recently due to top executives selling company stock — and on top of that, this incident happened,” said Ahn Jae-min of NH Research Center, forecasting that the outage “may undermine the company’s performance in the fourth quarter.”
Analysts added that the decline in stock prices may be only temporary, emphasizing that whether the user traffic for Kakao services returns to the pre-accident level will be the most important factor in the longer term.
SK Inc., which operates the SK C&C data center, fell 3.64 percent to 198,500 won.
“As SK C&C is responsible for fire control at the data center, there is a possibility that the damage may be compensated,” said Oh of Samsung Securities.
Naver inched up 0.91 percent to 167,000 won. The number of people using its Line messenger app increased from 430,000 on Friday to 1.28 million on Sunday, according to WiseApp.
Naver reported partial disruption in services due to the fire, but recovered faster than Kakao.
SK Square, which owns 66.26 percent of Tmap Mobility, climbed 2.6 percent Monday following the Kakao meltdown.
Tmap Mobility owns 49 percent of UT, a taxi-hailing service, and Uber holds the rest. UT, Kakao T’s smaller competitor, saw a jump in the user number following the service outage.
BY SHIN HA-NEE [email@example.com]