At one point, it went from 3rd to 10th in market cap… Investors are worried, “What if it falls further?”

Naver’s stock price, which once ranked third in KOSPI market capitalization, continues to slump. Naver, which is in a fierce battle for market share with Chinese e-commerce companies such as AliExpress and Temu, saw its stock price fall by more than 18% this year alone. Recently, there has been a double negative factor of Line Yahoo’s share reduction, but some in the securities market are of the opinion that the stock price decline is excessive.

As of 9:30 am on the 26th, Naver is trading at 182,900 won, up 200 won (0.10%) from the previous day.

The day before, Naver closed trading at 182,700 won, down 18.44% this year alone. Naver’s KOSPI market cap ranking rose to 3rd place as of the end of July 2021, but the situation changed as interest rates rose. Investment sentiment toward growth stocks began to freeze and sink, with the stock falling from 8th in market cap as of the end of last year to 10th now.

Recently, as Chinese e-commerce is rapidly expanding its market share, the negative observation that Naver’s position will be diminished appears to be adding to the negative news. App/retail analysis service Wise App/Retail/Goods estimated Temu’s first quarter payment amount to be 91.1 billion won. On a monthly basis, it jumped 453% in just 7 months from 1 billion won in August last year to 46.3 billion won in March.

However, the securities industry is of the position that it remains to be seen whether the aggressive actions of Chinese commerce platforms will continue for a long period of time. In fact, it is known that AliExpress’s sales fee exemption promotion will run until June.

In the case of Naver, despite the slowdown in the advertising and e-commerce industry, it is showing steady profit growth of more than 10%, so the stock market is pointing out that the current stock price is overly reflecting concerns.

The judgment of securities companies is similar regarding the reduction of Line Yahoo’s stake, which is one of the newly emerging issues. Naver, which launched its Line service in Japan in June 2011, is currently embroiled in a controversy over management rights as the Japanese government takes issue with its excessive dependence on Line Yahoo.

The most disappointing thing about selling Line Yahoo’s shares is missing out on Naver’s high future growth potential. Unlike Korea, Japan’s digital advertising accounts for less than half of the total advertising market, at 43.5%. The Japanese e-commerce penetration rate is only about 9.1% as of 2020.

The explanation is that since a low penetration rate means high future growth potential, the company will miss out on the benefits of the future growth of the Japanese Internet market.

In the securities world, the recent decline in stock prices is assessed as being excessive.

Since both Line Yahoo’s performance and stock price are currently sluggish, the analysis is that Naver will not lose much if it loses management rights in Line Yahoo in the future. In fact, Line Yahoo’s advertising growth rate last year fell below 5%, and commerce transaction amount, excluding peer-to-peer transactions (C2C) and services, is showing negative growth.

Jeong Ho-yoon, a researcher at Korea Investment & Securities, said, “In the short term, considering the analog characteristics of Japanese society and Line Yahoo’s poor performance and stock price, if it can be sold at an appropriate price, it is not expected to act as a significant downside risk to Naver’s current stock price. “I do it,” he said.