Kakao shares crater from W170,000 to W39,500 as shareholders fume: 'Nothing left to say'

Interior of Kakao's headquarters. [Kakao]

"Every day is hell." "Did they do a stock split?" "Nothing left to say." — Kakao shareholders

Since Nvidia CEO Jensen Huang's visit to South Korea, the fortunes of the country's two dominant platform companies have sharply diverged. While Kakao scrambles to manage an internal crisis — facing the first strike threat in its history — Naver Chairman Lee Hae-jin, long known for keeping a low profile, met with Huang and announced sweeping AI project plans.

Kakao has unveiled a "blueprint" to pivot toward AI, but its proprietary AI model Kanana is barely holding on to 10,000 monthly active users. The company's share price, which once topped 170,000 won (about $110), has long since fallen below the 40,000-won mark.

Industry watchers say Huang's visit has shifted how the market views Kakao and Naver.

Kakao's AI push has stalled, and the company's absence from Nvidia's list of Korean partners has not gone unnoticed. Despite declaring a transformation toward an AI-centered business, Kakao has yet to show tangible results — a shortcoming the industry increasingly views as a fundamental weakness.

Kakao has sold off major subsidiaries — including Kakao Games, Daum and Kakao VX — to fund its AI-focused restructuring. Yet the AI business remains largely stagnant. The Ministry of Science and ICT passed the company over for its government-backed independent AI foundation model initiative, which has been under way since last year. Monthly active users of its in-house AI model Kanana have fallen from roughly 70,000 in May last year to about 10,000 in just 12 months.

Monetizing AI is Kakao's most pressing challenge. Of the company's roughly 1.94 trillion won in first-quarter sales this year, the bulk came from its messaging-based advertising unit TalkBiz (about 608.6 billion won), commerce (about 270 billion won) and platform services (about 506.5 billion won). Analysts say lifting AI's share of revenue has become urgent.

Internal tensions have deepened as well. A dispute over performance compensation has escalated into a standoff between management and labor, pushing the company to the brink of its first-ever strike.

Particularly telling, industry observers say, was the absence of Kakao founder Kim Beom-su — who heads the Kakao Future Initiative Center — and CEO Chung Shin-a from the roster of Korean AI executives Huang met during his visit. Many in the industry called it a "symbolic moment" that laid bare the current state of Kakao's AI ambitions.

Nvidia CEO Jensen Huang poses with Naver Chairman Lee Hae-jin at Naver's 1784 headquarters in Seongnam, Gyeonggi Province, on Sunday. [Yonhap]

Naver, by contrast, has been making headlines with a string of major AI announcements.

The most prominent sign came when Lee — long regarded as a reclusive executive — met directly with Huang on Sunday. Naver and Nvidia announced plans to jointly build a global AI factory more than four times the scale of "Gak Sejong," currently South Korea's largest hyperscale data center.

The two companies' share prices have moved in starkly opposite directions. Kakao's share price fell 11.31 percent in May from the previous month, while Naver's rose 10.92 percent over the same period. As of Monday, Kakao traded at 39,500 won — down from a one-time high of 170,000 won and now below the 40,000-won threshold. Naver closed at 254,500 won on Monday, breaking out of the 190,000-to-low-200,000-won range where it had been stuck and resuming an upward trend.

"Since Kakao was passed over for the government's national AI model program last year, market skepticism about the competitiveness of its in-house AI model has been hardening into conviction," an industry official said. "Given that Kakao was also left out of the group of Korean AI companies Huang chose to engage with, a change in its AI strategy looks unavoidable."

ko@heraldcorp.com