South Korea’s largest chat platform operator Kakao Corp. may likely avoid the usual downturn after a stock split, given the upside from IPOs of its promising units.

Kakao shares will not trade from April 12 to 14 and relist on April 15 after a 5-to-1 stock split that cuts its face value to 100 won ($0.09) from 500 won.

A stock split does not affect the company’s fundamental corporate or market value but makes shares cheaper and more available in the market.

According to a 2020 business report disclosed by Samsung Electronics Co., the number of retail investors with less than 1 percent ownership in the bellwether stock surged by more than five-fold to 761,374 by December 2018 after a 50-to-1 stock split in May of the year.

Internet giant Naver also saw the number of its minority shareholders with less than 1 percent holdings double to 63,824 from 37,067 after a 5:1 stock split in October 2018.

Since the announcement of the split plan on February 25, Kakao shares gained 13 percent.

Of 10 companies that implemented a stock split last year, six saw stock prices fall in the following three months whereas those of four increased.

Analysts bet Kakao to be on the upside due to anticipation for increased cash flow.

Dunamu, operator of Korea’s largest crypto currency exchange Upbit, recently has been said to be targeting initial offering on the New York Stock Exchange in the U.S. Kakao owns a combined 23.1 percent stake in Dunamu directly and via subsidiaries.

Oh Dong-hwan, an analyst at Samsung Securities, has revised up the company’s stock price target to 680,000 won from 600,000 won, citing the gains from IPOs.

Lee Min-ah, an analyst at Daishin Securities, also upped its price target to 600,000 won from 550,000 won, saying “Investors need to pay attention to the recent fundraising and business growth of mobility division, upcoming initial offering of Kakao Pay and Kakao Bank, and growth potential of new businesses like Kakao Entertainment, Kakao Enterprise, and Ground X.”

Kakao shares on Friday rose 1.8 percent to finish at 558,000 won.

By Pulse

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