Kakao shares stay cold despite spinoff news, falling from 170,000-won peak to 30,000s

"Good news breaks and the stock still does not move." — a shareholder on Kakao's online discussion board.

Kakao's share price has failed to recover since the company announced a spinoff last week. The company said the corporate restructuring would "normalize" its undervalued stock, but shares that once topped 170,000 won ($123) have been stuck in the 30,000-won range.

Industry watchers say two conditions must be met before the stock can meaningfully recover: demonstrable results from Kakao's AI business and a reduction in the holding company discount.

According to Korea Exchange, Kakao shares fell 7.49 percent on Thursday — the day the spinoff was announced — dropping to 35,800 won from the previous session's close of 38,700 won. The stock has since fluctuated and edged up slightly, but closed Friday at 36,850 won, still below where it stood before the spinoff announcement.

Kakao cited maximizing corporate and shareholder value and eliminating the conglomerate discount — the drag on valuation that comes from bundling businesses of different characters under one roof — as key reasons for the spinoff. The market, however, has remained unmoved.

Shareholders have reacted with frustration. "What are they going to split off next?" wrote one. Others noted the stock is "down 80 percent from its peak" and questioned whether it had already hit bottom.

Kakao employees arrive at the company's Pangyo office in Seongnam, Gyeonggi Province. [Photo by Lim Se-jun]

Industry analysts are watching two key variables that will determine whether Kakao's share price can recover: the performance of its AI unit, Kakao AI, and the holding company discount that will apply to Kakao X after the split.

Kakao's AI monetization strategy — including agentic commerce — has yet to produce results. Kanana, the AI service it unveiled last year, is barely holding 10,000 monthly active users.

KB Securities said Kakao needs to "prove it has AI services and results the market can recognize, regardless of whether the spinoff goes ahead."

The same challenge faces Kakao X, which will in effect function as a holding company after the split. Its core subsidiaries — Kakao Bank and Kakao Pay — are already listed companies, creating a double-counting problem in which the same earnings are reflected in both the parent and subsidiary share prices. Industry observers say a holding company discount is therefore inevitable.

Samsung Securities said investors should watch for the possibility that "as Kakao X's character as an investment holding company becomes clearer after the spinoff, a steeper holding company discount than before may be applied." It added that while Kakao's current market capitalization already reflects a conglomerate discount, the presence of KakaoTalk as a core platform business has partially cushioned that discount.

Samsung Securities further noted that if Kakao Mobility pursues an additional listing, "the discount factors from overlapping listings are likely to expand."

ko@heraldcorp.com