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Analysts Slash Kakao Price Targets Following Spin-off Announcement
Technology Services · Internet Software/Services · yonhap_finance · 2026-08-24
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Brokerages lower Kakao's price targets, citing concerns over holding company discounts and the unproven profitability of its new AI-focused business unit.
What Happened
Spin-off Strategy: Kakao announced plans to split into two entities: 'Kakao AI,' focusing on core services like KakaoTalk and AI, and 'Kakao X,' a holding company for its subsidiaries and investments. The split is scheduled for January, aiming to simplify the corporate structure and improve capital allocation.
Market Reaction: Following the announcement, several brokerages downgraded their price targets for Kakao, with some shifting their ratings to 'Hold.' Analysts expressed concern that Kakao X would be treated as a pure holding company, leading to significant valuation discounts typical of such structures.
AI Business Skepticism: There is widespread caution regarding the growth prospects of the new Kakao AI unit. Analysts noted that the company's long-term AI revenue targets remain unproven, and investors are waiting for concrete evidence of monetization before adjusting their outlooks.
Future Outlook: The stock's future performance will likely depend on whether Kakao AI can command a premium as an AI growth stock versus the potential valuation drag from Kakao X's holding company discount. Market participants remain focused on the execution of the company's new business strategy.