Kakao (035720.KS) is facing growing headwinds as the company confronts the first headquarters-level strike risk since its founding. On the 27th of this month, the company's labor and management spent about eight hours in mediation procedures but ultimately received a decision to suspend mediation. Once mediation is suspended, the union can proceed to a strike following a vote.
With the headquarters union securing the right to legally strike, Kakao's union is expected to launch a walkout next month. Four affiliates — Kakao Enterprise, Kakao Pay, DK Techin, and XL Games — that previously failed to reach mediation and secured the right to industrial action have also passed strike votes in favor, raising the possibility of a joint general strike spanning the headquarters and its affiliates. Observers say that if the strike materializes, the burden on key business operations including AI model development, new service launches, and platform stability could grow.
Target Prices Falling
On the 28th, the trading day after the final negotiations between Kakao's labor and management broke down, the share price breached the 40,000 won level shortly after the open, hitting a 52-week low. Kakao shares, which traded around 62,100 won at the start of the year, have plunged about 35% this year and are now hovering around the 40,000 won range.
Some brokerages are lowering their expectations for Kakao. Daol Investment & Securities cut its target price for Kakao from 70,000 won to 60,000 won in a report on the 27th. "This year is a period for simplifying the governance structure while raising the completeness of the AI agent," said Kim Hye-young, an analyst at Daol Investment & Securities. "Monetization is expected to take time." She also assessed that Kakao's AI service "Kanana in KakaoTalk" still needs time to connect with external partners and advance the service, and is currently in a stage of improving its completeness.
Earlier, Mirae Asset Securities also lowered its target price from 78,000 won to 58,000 won, reflecting the deconsolidation of Kakao Games and a change in the earnings reference year. "Until visible results such as increased dwell time through AI adoption emerge, a re-rating will not be easy," said Lim Hee-seok, an analyst at Mirae Asset Securities. "Kakao needs to diversify Kanana's AI services through partnerships with major platforms."
