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Naver Corp. shares remain below 300,000 won ($240) on Tuesday after hitting a new 52-week low without any sign of an imminent end to foreign investors’ short selling spree that started following the company’s disappointing first-quarter earnings results.
Shares of the Korean internet giant closed Monday at 288,500 won, losing 3.83 percent from the previous session to dip below the 300,000-won mark. Since last Wednesday, a day before the company released its weaker-than-expected earnings for the first quarter, its shares have lost 8.56 percent.
After seesawing between the positive and negative territory, Naver shares fell 0.17 percent to 288,000 won during afternoon session on Tuesday.
The latest plunge was caused largely by foreign investors’ suspected shorting on the stock. On Monday, Naver’s short sale transaction amounted 53.9 billion won to take up 22.76 percent of its daily turnover.
Naver topped the Kospi’s short sale chart last Thursday and Friday, with its shorting amount totaling 34.4 billion won and 59.5 billion won, respectively. They accounted for 13.88 percent and 17.05 percent of the stock’s turnover for the respective days.
Shorting on Naver has jumped nearly 10 times from the average daily trade amount of 6.3 billion won over the recent 40 days.
Kakao Corp., Naver’s arch rival, also has been under heavy shorting attack. Kakao short sales amounted 28.3 billion won Thursday and 22.0 billion won Friday last week, ranking as second most shorted stock on the Kospi and third most on respective days. Shorting on Kakao has been high over the recent 40 days, averaging at 12.4 billion won a day.
Investors, especially foreigners, appear to have accelerated shorting on Naver following the company’s disappointing first-quarter earnings result released last Thursday, April 21.
Naver estimated its consolidated operating profit at 301.8 billion won over a revenue of 1.85 trillion won for the first three months of this year, missing market consensus of 344.1 billion won and 1.88 trillion won, respectively. Its underperformance was blamed on higher payroll and marketing expenses.
Its poor first-quarter earnings report was followed by analysts’ downward adjustment in their stock price target on Naver. Hyundai Motor Securities revised down its price target from 550,000 won to 500,000 won, Kyobo Securities from 440,000 won to 400,000 won, and NH Investment & Securities from 550,000 won to 410,000 won.
“All of Naver’s businesses except for content and search engine ads performed below expectation,” noted Kim Hyun-yong of Hyundai Motor Securities, adding that expenses, such as payroll and marketing costs, jumped 20 to 30 percent from the same period a year earlier to outpace sales growth.
Concerns for U.S central bank’s aggressive monetary tightening movement is also dealing a blow on Naver.
“Investors tend to avoid growth stocks that usually take long to collect profits when long-term interest rates are rising,” said Jung Myung-ji of Samsung Securities.
Analysts, however, are mixed in their view on Naver stock’s future movement. Some are predicting the stock to fall dipper while others think it has hit its bottom, given Naver’s rapid growth in content business.
[ⓒ Maeil Business Newspaper & mk.co.kr, All rights reserved]
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