Kakao shares up after 5-for-1 stock split

Kakao shares rose sharply on Thursday when the internet company resumed trading after a five-way stock split that lowered the value of its stocks from 500 won ($0.45) to 100 won per share.

Logo of Kakao. [KAKAO]

Kakao shares rose sharply on Thursday when the internet company resumed trading after a five-way stock split that lowered the value of its stocks from 500 won ($0.45) to 100 won per share.

Shares, which closed at 558,000 won on April 9, resumed trading at 111,600 won on Thursday. Trading was suspended from April 12 to April 14 due to the stock split.

The internet company rose 7.59 percent to close at 120,500 won on Thursday. Shares surged to 132,500 won during intraday trading.

This makes Kakao a 53.5-trillion-won company and places it at No. 5 in Korea in terms of market capitalization, beating Samsung Biologics and Hyundai Motor.

Trading volume was extremely high at about 16.94 million shares, worth some 2.08 trillion won. That's 21-times more than the volume traded on April 9.

Retail investors purchased more than 434.7 billion won, while institutional investors sold 277.4 billion won. Foreign investors offloaded 144.1 billion won.

The price of Kakao shares is expected to increase further following the company's good business prospects, market analysts say.

Kakao affiliates Kakao Bank and KakaoPay are likely to go public within the year, though specific dates have not been declared yet. Kakao Entertainment is currently under discussions to go public in the United States next year.

“As the performances and value of Kakao’s affiliates that are preparing for a listing have been rising, Kakao's promising business prospects may result in further share price increase,” said Oh Dong-hwan, an analyst at Samsung Securities.

Oh forecast Kakao’s net profit for the first quarter of the year at 176.1 billion won, up 120.4 percent from a year earlier.

Although the stock split makes Kakao shares more accessible to investors, not all companies that have decided to split their stocks have benefited.

According to market tracker FnGuide, of 91 Korean companies that split stocks on either the Kospi or Kosdaq market since 2018, only 35 saw their share price increase on the day they resumed trading on the market.

Shares of Naver, which also did a five-way stock split back in 2018, rose only 0.71 percent on the day it resumed trading. A month after the stock split, however, Naver shares had dropped 18 percent.

BY CHEA SARAH [chea.sarah@joongang.co.kr]