Kakao (035720) 🔎 In-depth
KOSPI · Price as of 2026-08-06 · Updated 2026-08-09
Kakao is an internet-platform company built around KakaoTalk, Korea's ubiquitous messaging app, monetizing through advertising, commerce features such as gift-sending, mobility, easy payments, and content including Melon (music) and webtoons. In the first quarter of 2026 it posted its highest-ever Q1 results, with revenue of ₩1.9421 trillion and operating profit of ₩211.4 billion (up 66% year over year), driven by Talk Biz advertising and its Pay business. The recent picture cuts both ways: on the strength side, Kakao pairs a user base of 50 million KakaoTalk users with stakes in listed subsidiaries such as KakaoBank and Kakao Pay, and its earnings are in a recovery phase. On the caution side, its net profit swings heavily with subsidiary results, and the pace at which its AI investments turn into profit is not yet clear, making the point at which those results show up an important thing to watch.
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30-second brief
Pulled directly from the computed values below — not a separately written opinion.
What do the SourceComputedEstimateReading tags mean?
Source filings and exchange data · Computed calculated from public data · Estimate our own unverified projection · Reading drafted automatically, then rule-checked. See AI & Automation.
Core valuation metric
This stock's effective sub-sector is “Platforms & Portals” (Internet, Platforms & Software), a type typically read first through P/E.
Platform and portal companies run several businesses at once — advertising, commerce, content — and monetize a large user base. So price-to-earnings (P/E) — the share price against earnings — is the first lens, read alongside a sum-of-the-parts view (SOTP) that values each distinct segment separately.
Price against earnings alone becomes unstable when earnings swing. Reading it together with price against assets helps gauge the downside.
This note explains how each sector is typically valued and is educational context only, not investment advice.
At-a-glance assessment financial health · growth · profitability · valuation
- Revenue rose 3.0% year over year, and the pace is slowing (3-year trend: rising).
- Most recent quarter (Q1 2026) revenue was 11.1% higher than a year earlier.
- ROE is 4.5% (controlling-interest basis). It is below the sector average.
- Operating margin is 9.8%.
- A sector-metric and in-depth research verdict — see “Valuation vs peers” below for the basis.
Ownership & governance As of 2020-12-31
Largest shareholder Kim Beom-su 14.12% (individual)
Controlling bloc incl. related parties 25.43%
With the controlling bloc holding 25%, control is maintained but the free float is relatively large.
Net asset value (NAV) assessment
💡 How to read a holding company · A holding company owns stakes in several subsidiaries. Its P/E swings with equity-method gains and losses on those stakes, so read it only as a rough guide. P/B is more meaningful because subsidiary stakes sit in equity, but book value carries them at low historical cost (so P/B looks higher than reality). The most accurate view is the price against the market value of those stakes (NAV) ↓
Valued against the net asset value (NAV) of its listed holdings rather than a consolidated P/E — see the in-depth valuation for the detailed basis.
Listed subsidiaries ownership
| Kakao Pay | 46.14% |
| Kakao Games | 37.57% |
| KakaoBank | 27.16% |
| SM Entertainment | 21.61% |
🔎 In-depth analysis Reading
Kakao earns money across several businesses, using KakaoTalk, a messenger with 50 million monthly users, as its springboard. The largest pillar is Talk Biz, which covers advertising and business messaging inside KakaoTalk along with commerce such as gift-sending and Talk Deal. Talk Biz revenue was ₩608.6 billion in the first quarter of 2026, of which advertising accounted for ₩338.4 billion, up 16% year over year. The second pillar is mobility (Kakao T) and easy payments (Kakao Pay). Revenue in this segment was ₩506.5 billion, up 30% year over year, and Pay's quarterly revenue topped ₩300 billion for the first time. The third pillar is content: the music service Melon contributed ₩484.6 billion, webtoons and web novels (Story) ₩182.4 billion, and media ₩92.4 billion. On top of this, Kakao holds sizeable stakes in listed subsidiaries such as KakaoBank, Kakao Pay, and Kakao Games, and the value of those stakes also makes up a large part of the company's overall worth.
The latest close is ₩38,300 and the market capitalization is ₩17.0 trillion. The price sits above its 20-day moving average (₩36,035) and above its 60-day moving average (₩38,107). It holds above both its short- and medium-term moving averages, so the trend looks healthy. The RSI (a supplementary indicator that gauges the strength of gains versus losses over the past 14 days on a 0-100 scale) is 58.0, a neutral level. The one-month change is +8.2%, the three-month change is -17.3%, and the position relative to the 52-week high is -43.4%. Relative strength versus the KOSPI is 11 (on a 1-99 scale, converted from returns against the index over the past year with more weight on recent performance; higher means stronger than the market). It is stronger than roughly 10% of all stocks. Over the past three months it outpaced the index by 0.7%. Chart interpretation is best done alongside trading volume and the dates on which disclosures occur.
Start with the valuation metrics. The P/E ratio (how many times one year of earnings the price represents) is 34.42x. That figure, however, is based on last year's (2025) net profit of ₩491.5 billion. Kakao's net profit last year was near a trough, having just recovered from a large loss in 2023, so with earnings now rising again, the P/E on last year's basis looks more expensive than it really is, an optical distortion. The P/B ratio (how many times net assets the price represents) is 1.48x. ROE (how much is earned in a year on equity) is 4.4%, still on the low side, which likewise reflects the early stage of the earnings recovery. The debt ratio (debt relative to equity) of 246% looks somewhat high, but Kakao is in a net-cash position, holding more cash than total borrowings. Net debt (total borrowings minus cash) is about ₩-2.3479 trillion, i.e. negative, meaning it holds more cash than it has borrowed. The debt ratio comes out high because the payments and financial businesses carry large deposit-like liabilities, which are different in nature from a borrowing burden. On cash generation, the free-cash-flow yield (actual cash generated relative to market cap) is 5.1%, so real cash generation is solid relative to the profit margin. EV/EBITDA (enterprise value, which reflects debt and cash, divided by operating profit before depreciation) is 8.5x, a metric on which the burden looks lower than the P/E alone would suggest.
Revenue is growing gradually. Full-year 2025 revenue was ₩8.099 trillion, up 3.0% year over year, and it has grown at roughly 8% a year on a five-year average. The pace of revenue growth itself has slowed from earlier years. Earnings, by contrast, are rebounding clearly. Operating profit rose 48%, from ₩495.3 billion in 2024 to ₩732.0 billion in 2025. Net profit climbed out of a ₩1 trillion loss in 2023 to ₩55.3 billion in 2024 and ₩491.5 billion in 2025, moving off losses and onto a recovery track. In the first quarter of 2026 this trend strengthened further, with revenue up 11.1%, operating profit up 66.0%, and net profit up 13.2%, marking the highest-ever Q1 results. Expanding advertising demand and growth in Pay and mobility are driving the earnings improvement. Reflecting this earnings trajectory, the valuation on this year's expected earnings comes out noticeably lower than the P/E on last year's basis. In other words, while last year's figures alone make it look expensive, the burden eases once this year's rising earnings are taken into account.
Recent disclosures and company announcements center on earnings and governance. In May 2026 the company reported first-quarter results, posting record Q1 figures of ₩1.9421 trillion in revenue and ₩211.4 billion in operating profit. Around the same time, Kakao laid out a direction to transform KakaoTalk into an "AI agent platform," describing a strategy of combining its own AI technology with external conversational AI within KakaoTalk. On the governance side, in May it disclosed its corporate governance report and large-business-group status, and there were numerous filings on changes in holdings by executives and major shareholders. A partial sale of the Kakao Games stake is underway, prompting discussion of a possible change in its largest-shareholder status, which illustrates the holding-company nature in which subsidiary ownership structure is tied directly to the company's value.
Kakao is in a phase of recovering earnings after passing a bottom. Its strengths are clear: a base of 50 million KakaoTalk users, a revenue structure spanning advertising, commerce, Pay, and content, and a solid balance sheet in a net-cash position. The 66% jump in first-quarter 2026 operating profit is a sign that this recovery is being confirmed in the numbers. On valuation, the P/E on last year's basis looks high, but the burden eases when viewed on this year's rising-earnings basis. The cautions, though, are just as clear. First, Kakao is a holding-type company in which subsidiary stakes make up a large part of its value, so its net profit swings heavily with subsidiary results. That makes it hard to conclude cheap or expensive from a single P/E, and one has to include the value of the listed-subsidiary stakes it holds. Second, the direction of the AI strategy has been laid out, but when and how much profit it will return is still at the confirmation stage. In short, it is strong when advertising and Pay profit growth continue and subsidiary results provide support, and weak when the payback on AI investment is delayed or subsidiary earnings wobble.
🔎 Valuation vs peers Inconclusive
It is compared against Korea's leading internet platform (NAVER) together with the listed subsidiaries in which Kakao holds stakes (KakaoBank, Kakao Pay, and Kakao Games), since the holding-company nature makes the relationship with subsidiaries central to interpreting the valuation.
| Peer | P/E | P/B | ROE |
|---|---|---|---|
| NAVER | 18.15x | 1.20x | 6.18% |
| KakaoBank | 21.46x | 1.56x | 8.00% |
| Kakao Pay | 124.96x | 2.93x | 3.40% |
| Kakao Games | — | 0.75x | -8.45% |
Kakao is a company that is hard to judge on a simple P/E. First, last year's net profit was at a trough, having just emerged from a large loss, so the trailing P/E of 31x looks more expensive than it really is; reflecting this year's recovering earnings noticeably lowers the valuation burden. Second, NAVER sets a reference point for domestic internet platforms with a P/E of 15x and ROE of 7%, so on the metrics alone Kakao appears to carry a premium because its earnings recovery is still early. Third, Kakao is a holding-type company that holds large stakes in listed subsidiaries such as KakaoBank, Kakao Pay, and Kakao Games. For such a company, it is more accurate to sum the market value of its holdings and the operating value of the parent rather than rely on the consolidated P/E. In particular, the P/B can also look higher than reality because subsidiary stakes are carried at low acquisition cost, so a holding-company approach (summing net asset value and segment values) is needed. For these reasons the valuation is left inconclusive rather than settled one way or the other.
Price history Close · MA20 · MA60
The latest close is ₩38,300 and the market capitalization is ₩17.0 trillion. The price sits above its 20-day moving average (₩36,035) and above its 60-day moving average (₩38,107). It holds above both its short- and medium-term moving averages, so the trend looks healthy. The RSI (a supplementary indicator that gauges the strength of gains versus losses over the past 14 days on a 0-100 scale) is 58.0, a neutral level. The one-month change is +8.2%, the three-month change is -17.3%, and the position relative to the 52-week high is -43.4%. Relative strength versus the KOSPI is 11 (on a 1-99 scale, converted from returns against the index over the past year with more weight on recent performance; higher means stronger than the market). It is stronger than roughly 10% of all stocks. Over the past three months it outpaced the index by 0.7%. Chart interpretation is best done alongside trading volume and the dates on which disclosures occur.
Relative performance stock vs index · start = 100
Excess return vs index · 3M +0.69% / 6M -48.44% / 12M -64.84%
Key metrics Computed vs sector median
Valuation
The P/E of 34.42x is above the sector median (16.39x). The P/B of 1.48x is above the sector median (1.17x). That said, this P/E is based on last year's (trailing) results. With recent quarterly earnings up sharply, the trailing P/E can look higher than it really is, so a precise read is best done on this year's expected (forward) earnings.
Enterprise value (EV)
EV = market cap + net debt. It reflects cash and debt, so it captures the real cost of the whole business that market cap alone misses; lower multiples are cheaper relative to earnings or sales.
Intrinsic value (DCF estimate) Estimate
Model output — not a price target. This is what the formula returns under the assumptions below, not a view on where the share price should go.
DCF (discounted cash flow) estimate — discount rate 10.7%, initial growth 10.0%→terminal 2.0%, 10-yr forecast, free-cash-flow basis, forward earnings power normalized 1.584x. A reference range that shifts materially with assumptions.
Profitability & financials
Return on equity (ROE) is 4.5%, below the sector average (7.0%). The operating margin is 9.8%. The debt ratio is 116.5%, so the financial structure is moderate.
Growth FY2025 · annual report (consolidated)
| Item | 2023 | 2024 | 2025 | YoY |
|---|---|---|---|---|
| Revenue | $5.3B | $5.5B | $5.7B | +2.99% ↓ slower |
| Operating profit | $339.3M | $347.9M | $514.3M | +47.80% ↑ faster |
| Net profit | -$711.3M | $38.8M | $345.3M | +789.14% |
| 5-year | 2021 | 2022 | 2023 | 2024 | 2025 |
|---|---|---|---|---|---|
| Revenue | $4.2B | $4.8B | $5.3B | $5.5B | $5.7B |
| Operating profit | $413.0M | $400.0M | $339.3M | $347.9M | $514.3M |
| Net profit | $974.6M | $954.0M | -$711.3M | $38.8M | $345.3M |
| Revenue CAGR | 4-yr avg 8.19% | ||||
Revenue rose 3.0% year over year (2023 ₩7.6 trillion → 2024 ₩7.9 trillion → 2025 ₩8.1 trillion), and the three-year trend is 'rising'. That said, the pace of growth slowed from the prior year. Operating profit rose 47.8% year over year. Profit is growing at an accelerating pace. Over the 5 years on record, revenue compound annual growth (CAGR) is 8.2%. The two-year revenue CAGR is 3.5%. In the most recent quarter (Q1 2026), revenue was 11.1% higher than the same period a year earlier.
Latest quarterly results Source Q1 2026 · vs year-ago
Technical indicators Computed
What stands out
- —
Points to watch
- Revenue rose 3.0% year over year, and the pace is slowing (3-year trend: rising).
Recent news & events searched · sourced
- 2026-05-07EarningsFirst-quarter 2026 revenue of ₩1.9421 trillion (+11.1%) and operating profit of ₩211.4 billion (+66.0%), the highest-ever Q1 results, with Talk Biz advertising and Pay/mobility driving growth.Confirms the earnings-recovery track in the numbers. The marked improvement in operating profit is a factor that lowers the valuation burden on this year's basis. Source
- 2026-05-07IRThe company laid out a direction to transform KakaoTalk into an "AI agent platform," combining its own AI technology with external conversational AI within KakaoTalk.A medium-to-long-term growth axis, but the timing and scale of monetization are undetermined. It will take time to confirm the results. Source
- 2026-05-28FilingDisclosure of the corporate governance report and large-business-group status, providing regular disclosure of the group structure including listed subsidiaries.Information that reaffirms the holding-company structure in which subsidiary stakes are central to value. Source
- 2026-05-28FilingNumerous filings on ownership of specific securities by executives and major shareholders, disclosing changes in holdings.A basis for tracking the flow of changes in governance and subsidiary holdings. Source
Figure cross-check computed ↔ external
Recent filings Source
- 2026-06-01Large-business-group status disclosure (amended)
- 2026-05-28Corporate governance report
- 2026-05-28OwnershipOfficers'/major-shareholders' holdings report
- 2026-05-28Large-business-group status disclosure
- 2026-05-28Large-business-group status disclosure
- 2026-05-19OwnershipOfficers'/major-shareholders' holdings report
- 2026-05-19OwnershipOfficers'/major-shareholders' holdings report
- 2026-05-19OwnershipOfficers'/major-shareholders' holdings report
- 2026-05-19OwnershipOfficers'/major-shareholders' holdings report
- 2026-05-19OwnershipOfficers'/major-shareholders' holdings report
- 2026-05-19OwnershipOfficers'/major-shareholders' holdings report
- 2026-05-19OwnershipOfficers'/major-shareholders' holdings report
📖 Plain-language glossary — expand if you are new to this
- P/E
- How many times a year's net profit the price is worth (lower is cheaper relative to earnings). The P/E here is on trailing (last full-year) results; for companies whose earnings swing fast (memory chips and other cyclicals/high-growth), a forward P/E on this year's expected earnings is more accurate.
- P/B
- Price relative to net assets (equity). Around 1x means it trades near book value; below 1x means below book.
- P/S
- Price relative to a year's revenue — useful for growth companies with thin earnings.
- Net debt / EV
- Net debt = interest-bearing debt − cash. Negative means more cash than debt (net cash). EV (enterprise value) = market cap + net debt, closer to what it would cost to buy the whole business.
- EV/EBIT · EV/EBITDA · EV/Sales
- Enterprise value against operating profit (EBIT), EBITDA, or revenue. Unlike P/E these reflect debt and cash; lower is cheaper relative to earnings power or sales.
- FCF / FCF yield
- Free cash flow = operating cash − capex, the cash actually left over. FCF yield = FCF ÷ market cap; higher means more cash generated per unit of market value.
- Intrinsic value (DCF)
- Future free cash flow (or, for some capex-heavy but profitable names, forecast earnings) discounted to today to estimate per-share value. Because it shifts a lot with the discount-rate and growth assumptions, it is shown as a bear/base/bull range, and the basis and assumptions are disclosed in one line beneath it.
- ROE
- How much profit the company earns in a year on its equity (%). Higher means better returns on capital.
- EPS / BPS
- Earnings per share / net assets (book value) per share.
- Operating / net margin
- Profit left from the core business / final profit after tax and interest, per unit of revenue.
- Debt ratio
- Debt relative to equity (%). Higher means more reliance on borrowing (norms vary by sector).
- Current ratio
- Assets convertible to cash within a year against debt due within a year. Above 100% leaves some short-term headroom.
- Interest coverage
- How many times operating profit covers the interest owed. Below 1x means operating profit alone struggles to cover interest.
- Dividend yield / payout ratio
- The year's dividend as a % of today's price / the share of earnings paid out as dividends.
- Revenue CAGR
- Multi-year growth expressed as a single yearly average (compound annual growth rate).
- RSI (short-term signal)
- Whether recent price action is overheated or beaten down. Above 70 is overbought, below 30 oversold.
- MA20 / MA60 (moving averages)
- The 20- and 60-day average price. Price above them signals a firmer short-term trend.
- vs 52-week high
- How far below the past year's peak the price sits now (%).
All figures are for reference only; how they read varies by sector and over time.
Sources: Korea FSC market-price API (data.go.kr), OpenDART, KRX/KIND — public data only.
Bong Stocks presents public-data-based information for reference only. It is not investment advice and contains no target prices, ratings, or buy/sell recommendations. Verify independently before making any decision.