Kakao Corp (035720.KS), the operator of Korea's near-ubiquitous KakaoTalk messaging app and one of the country's two dominant internet platforms, has drawn price-target cuts from three brokerages this week — to a range of ₩57,000–₩62,000 — even as analysts forecast second-quarter operating profit rising roughly 17% year on year. The apparent contradiction is the story: analysts who expect Kakao to roughly meet forecasts are cutting where they think the stock can trade, and the reason they give is not the current business but the one they cannot yet see — a paying customer for its artificial-intelligence push.
The disconnect, in numbers
DB Financial Investment, a Korean brokerage, cut its Kakao target to ₩57,000 ($42) while keeping a buy rating, and Hanwha Investment Securities lowered its target to ₩62,000 ($45), also maintaining buy, according to Maeil Business Newspaper (Maeil Kyungjae) and the Korea Economic Daily (Hankyung) on July 7. Hankyung reported a third cut, BNK Investment Securities trimming its target to ₩61,000 ($45) from ₩70,000 ($51). All three kept positive ratings even as the numbers came down.
That is happening against forecasts that are broadly fine. DB Financial Investment estimates second-quarter revenue of ₩2.01 trillion ($1.47 billion), down 0.8% year on year, and operating profit of ₩218.4 billion ($159 million), up 17.4%, per Seoul Economic Daily (Sedaily). Hana Financial Investment's estimate is similar at about ₩2.07 trillion ($1.51 billion) in revenue and ₩223.7 billion ($163 million) in operating profit, Sedaily reported. Hankyung noted that TalkBiz — Kakao's advertising-and-commerce unit built on KakaoTalk — is expected to keep growing, with in-app message advertising up in the mid-teens percent and the gift-commerce service (선물하기, or "Gift") holding firm.
What is actually being repriced
The cuts are a re-rating of Kakao's future, not a downgrade of its present. Analysts cited by all three outlets point to the same hole: Kakao's AI initiatives have users but no disclosed revenue model. Hankyung reported that an in-app ChatGPT feature has drawn roughly 11 million cumulative users, yet the traffic has not been converted into a monetization strategy the market can underwrite. Hankyung also flagged a demand-side risk beneath the ad engine — it reported KakaoTalk weekly active users have fallen by more than one million versus November 2024, which, if sustained, pressures the ad pricing that TalkBiz depends on.
The sizing makes the sensitivity clear. Kakao's advertising and commerce revenue both ride on the KakaoTalk user base, so a slipping active-user count and an unproven AI layer bracket the stock on two sides: the cash-generating core is maturing, and the growth story that once justified a premium multiple has not arrived.
The long round trip
Kakao has already lived through the re-rating in extreme form. The shares traded as high as ₩173,000 ($126) intraday on June 24, 2021, at the peak of Korea's pandemic-era platform boom, Sedaily reported; the stock closed around ₩35,400 ($26) on July 7, 2026, roughly 80% below that high and down about 41% year to date. The 2021 valuation embedded open-ended platform expansion. What replaced it is a company whose core earnings are defensible but whose next leg of growth is exactly the item brokers now say they cannot price.
What would settle it
The question the cuts pose is narrow and testable: does Kakao have a way to turn AI usage into revenue? One analyst quoted by Hankyung put the bar plainly — a re-rating requires that "the possibility of AI-business monetization be confirmed, even partially." The next checkpoint is Kakao's second-quarter earnings release, expected next month, and any accompanying disclosure on how the ChatGPT feature or Kakao's own AI services will charge. Steady TalkBiz numbers would confirm the floor the bulls are defending; a concrete monetization signal is what the trimmed targets are waiting on.
This article is journalism, not investment advice. LineVest is not a registered investment adviser. Figures are drawn from the cited Korean financial press as of July 7, 2026; USD equivalents use an approximate rate of ₩1,370 per dollar and are for reference only.
