Initiating Coverage of Kakao With No Moat, Stable Trend, and FVE of KRW 78,000; Stock Is Overvalued
We are initiating coverage of Kakao with a fair value estimate of KRW 78,000 per share and a very high uncertainty rating. We think the firm has no moat and a stable moat trend, given the lack of a proven model for generating economic returns from its customer base. However, we believe its flagship mobile messaging app, Kakao Talk, will maintain its dominant position in South Korea, owing to the network effect and switching costs, similar to other dominant messaging systems elsewhere. Investment...Kakao is engaged in the provision of Internet services to its users and advertisers. Co. provides its owned and operated online properties and services for its users. Co. provides a range of tools and marketing services designed to enable businesses to reach its users for its advertisers.
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