Naver's Webtoon Gains in U.S. Debut After $315 Million IPO
By Kwanwoo Jun
Webtoon Entertainment closed higher on its first day of trading on the Nasdaq after the online comics platform backed by South Korean internet giant Naver raised $315 million in an initial public offering.
Webtoon shares rose 9.5% to $23.00 on Thursday, lifting the Los Angeles-based company's market capitalization to roughly $2.9 billion. Webtoon had sold 15 million shares in its IPO at $21 apiece, pricing at the top end of its marketed range amid bullish investor sentiment for South Korea's fast-growing digital comics industry.
The company is also raising $50 million in a private placement of shares to controlling shareholder Naver, the largest internet platform group in South Korea.
Webtoon, launched in 2005 as a side project of Naver, offers thousands of digital comics titles in genres including fantasy, comedy, action, romance, horror and science fiction. The company said it booked revenue of about $1.3 billion last year and has 170 million monthly active users in more than 150 countries.
Webtoon plans to use the IPO proceeds to expand its business in North America amid rising global popularity of Korean music, drama and cultural products. Market research firm Spherical Insights & Consulting has forecast the global industry for webtoons -- short for web-based cartoons, referring today to various types of digital comics made for reading online on computers and smartphones -- to expand to more than $60 billion by 2030 from an estimated $4.7 billion in 2021.
Naver has a stake of more than 60% in the company, while Japanese internet company LY Corp. is also a major shareholder.
Citi analysts John Yu and Alicia Yap trimmed their target price on Naver by 5.6% in the wake of the offering, citing a valuation for Webtoon well short of their previous estimates, as well as Naver's diluted ownership in the company. They forecast downside risk to operating profit margin in the near term, citing in part Webtoon's granting of a $30 million cash bonus to the company's chief executive during the IPO.
The Citi analysts trimmed their estimate for Naver's 2024 operating profit by 5.4% to reflect one-off labor costs for Webtoon, but they kept a buy rating, citing ad revenue recovery, cost controls and improvement in e-commerce take rate.
Write to Kwanwoo Jun at kwanwoo.jun@wsj.com
(END) Dow Jones Newswires
June 28, 2024 04:02 ET (08:02 GMT)
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