[June 22, KOREA WAVE]Yanolja, a Korean travel site operator, and Naver Webtoon, a comic distribution service, are reportedly aiming to list on the US Nasdaq. The market is paying close attention to whether Yanolja and Naver Webtoon can inherit the success story of Coupang, a major Korean online shopping company that is listed on the New York Stock Exchange (NYSE). However, some are of the opinion that their growth may slow down and that their stock prices may fall after listing, just like Coupang.

An industry source said on the 20th that Yanolja plans to launch an initial public offering (IPO) in the U.S. as early as next month. Bloomberg News previously estimated Yanolja’s enterprise value at between $7 billion and $9 billion.

Naver Webtoon’s North American subsidiary, Webtoon Entertainment, submitted a securities report for its IPO to the US Securities and Exchange Commission (SEC) on the 31st of last month. Naver is the largest shareholder of Webtoon Entertainment, holding 63.4% of the total.

According to a securities filing, the offering price is between $18 and $21 per share. The company is expected to offer a total of 15 million shares, raising up to $315 million. After the listing, the company’s market capitalization is expected to be up to $2.67 billion. Once the listing is complete, Webtoon Entertainment will trade under the ticker symbol WTBN.

◇ Can Coupang’s “success myth” be inherited?

Given the precedent of Coupang, which was listed on the U.S. stock market and saw its corporate value highly evaluated, Yanolja and Naver Webtoon are also attracting attention.

Coupang began trading on the Nasdaq on March 11, 2021, at a public offering price of $35 per share. The opening price was $63.5, 81.4% higher than the public offering price. On that day, the stock price soared to $69, eventually closing at $49.25, a 41% increase from the public offering price. At the closing price, Coupang’s market capitalization was $88.65 billion, exceeding 100 trillion won in Korean won.

Coupang, which went public at a loss, has since managed to turn a profit, achieving its first quarterly profit in the third quarter of 2022 and an annual profit last year.

◇ Slowing growth and downward slope

However, Coupang’s stock price has been on a downward trend. It closed at $20.39 on the 18th, down 41.7% from the IPO price and 67.9% from the opening price. The reasons cited for the decline include the acquisition costs of British brand clothing online retailer Farfetch and the expansion of Chinese e-commerce companies into South Korea.

Slowing growth is also a common concern for Yanolja and Naver Webtoon.

Yanolja’s consolidated sales for the first quarter were KRW 194.7 billion, up 30% year-on-year. Operating profit was KRW 14.9 billion, successfully turning a profit during the same period. Sales from the platform division, including reservation fees and advertising, came in at KRW 86.8 billion, accounting for 44.6% of total sales, followed by Interpark Triple sales of KRW 70.1 billion (36%) and the cloud division of KRW 44.4 billion (22.8%).

Yanolja’s operating profit margin last year was 0.22%, continuing to decline after recording 17.9% in 2021. In 2022, Yanolja posted sales of 603 billion won and operating profit of 13.8 billion won, with an operating profit margin of 2.3%.

A Yanolja official said, “There’s nothing we can say” about the company’s Nasdaq listing, but explained about its low profitability, “We posted losses in the first and second quarters of last year due to investments in the solutions division, but we’ve been growing and turning a profit since the third quarter.”

Naver Webtoon is expected to see a slowdown in industry growth. According to Naver, webtoon entertainment sales last year were 80.2 billion won, down 22.5% from the previous year (103.5 billion won). This is a significant decrease considering that last year’s sales growth rate was 19.7%.

According to Mirae Asset Securities, the global webtoon industry experienced explosive growth in 2020 when the impact of COVID-19 began to take hold, but its growth rate has since slowed.

Lim Hee-seok, a researcher at Mirae Asset Securities, analyzed, “The webtoon industry’s growth momentum is stagnating due to difficulties in expanding the age range of global users and a slowing supply of content.”

Lim believes that the IPO of Webtoon Entertainment is unlikely to boost Naver’s performance or stock price. “It will be difficult to boost the growth rate of content sales in a short period of time after the IPO, and the uncertainty surrounding Line and Yahoo and the threat of Chinese commerce remain the same,” he explained.

(c)KOREA WAVE/AFPBB News