Kakao's controversial CEO nominee resigns as Kakao shares dip 44% from peak

[Photo by Kakao Pay Corp.]

[Photo by MK DB]

The new year has not been kind on Korean platform giant Kakao Corp. after a spectacular year in 2021, with the listed family member’s value losing more than $10 billion into the year as the parent grappled with confidence issue and unprecedented labor unrest.

Kakao shares finished Monday 3.4 percent lower from Friday at 96,600 won ($80.57) and 14 percent down from the 2021 closing. Against the peak of 173,000 won in June last year, they are down 44 percent.

The platform countered its first-ever labor unrest as its union threatened to go on a strike in protest to the appointment of Kakao Pay CEO Ryu Young-joon as its new CEO. He has come under fire for exercising stock option in Kakao Pay shares just a month after its IPO. Ryu and seven other Kako Pay senior executives sold combined 440,000 shares of the company they had received through stock option only a month after it went public.

Ryu profited 46 billion won, raising criticism that the listing of the company ended up benefiting the key management members who had excessive stock options.

Kakao board on Monday accepted Ryu’s resignation as protests did not subside after Ryu’s public apology.

Its family also had suffered. Shares of Kakao Corp.’s two financial units, Kakao Bank Corp. and Kakao Pay Corp., also plunged 6.78 percent and 12.03 percent last week while Kosdaq-listed Kakao Games shares plunged 18.35 percent.

Kakao shares have met with massive selloffs by foreign and institutional investors. Offshore investors net sold 693.9 billion won, 145.7 billion won, and 130.7 billion won worth of Kakao, Kakao Games, and Kakao Bank shares, respectively, so far this month. Institutional investors also dumped 75.5 billion won worth of Kakao Pay shares.

Kakao Group stocks have tanked largely due to fears that the U.S. Federal Reserve’s monetary tightening would begin earlier than anticipated, possibly in March. The higher interest rate, the lower tech or growth stocks’ valuation that has been inflated during the liquidity-driven stock rally last year.

It will also take time before the internet giant gains momentum from its new platform businesses, according to eBEST Investment & Securities.

Planned IPOs of Kakao Mobility and Kakao Entertainment also can prompt investors to jump ship. The state’s warning for stricter regulations on big internet companies continues weighing on investors’ sentiment, too.

[ⓒ Maeil Business Newspaper & mk.co.kr, All rights reserved]