Naver shares remain sluggish amid AI stocks surge

2023.06.05 13:54:01 | 2023.06.05 13:57:34

[Photo by Park Hyung-ki]이미지 확대

[Photo by Park Hyung-ki]

Despite the global surge in artificial intelligence (AI)-related stocks, shares of South Korea’s top portal Naver Corp. are displaying a sluggish trend. Investor sentiment towards the company seems to be deteriorating due to the launch of generative AI machines by global big tech companies, such as OpenAI’s ChatGPT and Google LLC’s Bard, and China’s ban on access to Korean web portals.

According to the Korea Exchange, Naver’s stock price has fallen 11.28 percent so far this year after hitting an all-time high of 230,500 won ($176.12) in February. Although the price rose to the 200,000 won level at the end of January, as expectations grew that the U.S. Federal Reserve would halt its interest-rate hiking cycle and that the stock price had reached its lowest point, it began to decline again after February, falling below 200,000 won. Additionally, foreign investors have net sold 170 billion won worth of Naver shares while purchasing other Korean stocks this year.

The decline in Naver’s share of the Korean internet search market appears to have impacted its stock price. According to Internet Trend, a website analysis company, Naver’s market share decreased to 55.36 percent at the end of last month from 64.8 percent at the end of last year. In the same period, Google’s share rose to 35.3 percent from 26.8 percent, narrowing the gap with Naver.

There are also concerns that Naver’s dominant position in the Korean search market may be threatened by Microsoft Corp. and Google’s push to integrate real-time search services with their generative AI machines. Naver plans to release “Search GPT,” an advanced search service based on its large-scale language model “HyperCLOVAX,” in the third quarter of this year. However, Google’s preemptive release of a Korean version of its generative AI chatbot, Bard, last month has placed Naver in a position where it needs to further refine its own version.

Naver’s main business, the advertising sector, has also been impacted by the economic slowdown that persisted from last year. The company’s search platform sales in the first quarter reached 851.8 billion won, a marginal increase of 0.2 percent compared to the same period last year, but a decline of 7.1 percent from the previous quarter. Display advertisements, which are sensitive to economic fluctuations, decreased by 13.1 percent from the same period last year.

Furthermore, China’s ban on Korean content is acting as a negative factor for Naver’s stock price. While China had previously blocked access to Naver’s online forum features, allowing access to its search service, it completely blocked the service at the end of last month. This resulted in Naver’s stock price plunging 4.25 percent on May 24. Some analysts, however, predict that Naver’s stock price will regain upward momentum in the second half of the year due to an improvement in economic conditions and the launch of Search GPT.

By Kim Geum-yi and Yoon Yeon-hae

[ⓒ Pulse by Maeil Business Newspaper &, All rights reserved]