Naver, Kakao shares in freefall as union risks mount amid AI push

Naver share price: 450,000 won ($303) → 180,000 wonKakao share price: 140,000 won → 30,000 won

Union-related risks have hit both Naver and Kakao in quick succession, sending shares in the two companies that dominate South Korea's platform industry into a steep decline. Naver, whose stock once drew predictions it would climb to 1 million won, has tumbled into the 100,000-won range, while Kakao has fallen to the 30,000-won level. Once celebrated as flagship stocks of the country's IT sector — with some calling them a bargain buy — both companies have seen their share prices slide without relief.

Analysts say labor-management conflict has deepened management uncertainty at a time when both companies need to demonstrate clear profits from their AI businesses.

Kakao's union staged a strike last month and has announced a picket demonstration for Tuesday. Naver's union, meanwhile, is pushing to consolidate separate wage, welfare and working-condition negotiations across its subsidiaries into a single round of unified bargaining with the parent company — a sign that labor unrest is spreading across the platform industry.

Union risks at both Naver and Kakao have weighed on investor expectations for their AI businesses, IT industry sources said Monday. Kakao's share price closed at 35,050 won, breaking below the 40,000-won threshold, while Naver's stock ended at 185,900 won — down about 28 percent from the 250,000-won range it traded at in early June.

Industry observers say the labor disputes have dampened investor sentiment at a critical moment when both companies need to accelerate the monetization of their AI businesses.

Kakao fired the opening shot. After collective bargaining talks between Kakao's union, known as Crew Union, and management broke down in May, the union held a half-day strike on June 10 and a full-day strike on June 29. The two sides have continued to explore negotiations since the strikes, but have yet to reach a final agreement.

The standoff shows no sign of ending soon. The union plans to hold a picket demonstration Tuesday inside Kakao's Ajit office in Pangyo, Seongnam, Gyeonggi Province, with members participating voluntarily during the noon lunch hour for one hour. No separate rally or march is planned.

Kakao union members sing "March for the Beloved" at a strike rally held at Youthspace Plaza in Seongnam, Gyeonggi Province, on June 10. [Yonhap]

Union risk has also emerged at Naver. The company's union is pushing to consolidate wage, welfare and working-condition discussions — previously handled separately by each subsidiary — into a single round of unified bargaining with Naver's parent company. The push for unified bargaining has been in the works since the union was founded in 2018.

Union members agree that joint bargaining with the parent company is necessary to address disparities in treatment across subsidiaries and the limitations of the current decision-making structure. The union plans to invoke the so-called "yellow envelope law," which expands the definition of who qualifies as an employer, as the legal basis for bringing Naver's parent company to the bargaining table.

Labor-management tensions at Naver are expected to intensify from next month. The union plans to hold information sessions and feedback meetings for employees in early August, with a formal demand for the start of unified bargaining to be submitted to management as early as late August.

The IT industry broadly reads the deepening labor disputes at both companies as a warning sign for their core AI businesses. With growth in their existing platform operations slowing, both Naver and Kakao need to develop AI into a new revenue stream — making stable organizational management more critical than ever, analysts say.

Industry observers agree that commerce remains the primary revenue driver for both companies, and that the link between their AI businesses and actual profits remains unclear. Kim So-hye, a researcher at Hanwha Investment Securities, said the companies "need to show at least some results from their AI services in the second half of the year," adding that "the buzz around their publicly launched services and the pace of user growth have been somewhat slower than the market expected."

An industry official said AI development "requires not only massive investment but also close cross-team collaboration and fast decision-making," warning that "if labor-management conflict drags on, the organization's capacity could become fragmented not just in terms of cost burden but also in the execution of core business initiatives."

chami@heraldcorp.com