Naver shares down in early trading over LINE controversy

[Photo by MK DB]

Naver Corp. saw a slight decline in early trading on Thursday on speculation that Japan’s top messenger app, LINE, may be moving away from Naver’s ownership.

Naver shares traded at 186,600 won ($136.5) on the Korea Exchange as of 9:57 a.m. on Thursday morning, down 2.25 percent from the previous day’s closing. The stock dropped to 185,500 won right after the opening bell.

This is a second consecutive day of declines for the stocks after a 2 percent decrease to 190,900 won at the close of the previous trading day.

LINE Yahoo announced its intention to exclude Shin Jung-ho, who is the company’s Chief Product Officer (CPO), from the company’s board and pursue independence from Naver in terms of technological collaboration. Shin, who led LINE‘s development, was the only Korean member among the existing seven directors and with this change, the new six-member board will be composed entirely of Japanese individuals.

Market watchers have interpreted this move as effectively erasing Naver’s influence over LINE.

Since launching LINE in Japan in June 2011, Naver has grown it into a large messenger app with a monthly active user base of 96 million, solidifying its position as a national messenger service.

However, when Naver Cloud was infected with malware due to a cyberattack that led to the exposure of personal information from LINE Yahoo in November 2023, the Japanese government issued administrative guidance demanding cybersecurity reinforcement. Suspicion arose that the guidance included a request for a reassessment of the capital relationship, fueling speculation that Japan might be aiming to strip Naver of its LINE Yahoo management rights. SoftBank and Naver each currently hold a 50 percent share in A Holdings, the parent company of LINE Yahoo, and are discussing the matter.