South Korea's benchmark Kospi index has surged more than 1,000 points this year, yet Naver and Kakao—once dubbed "national stocks"—have been left behind in the rally.
The combined market capitalization of the two leading platform companies has shrunk to less than half their share of the Kospi from three years ago, according to data from the Korea Exchange on March 9.
Naver shares have risen just 1.21% since the start of the year, while Kakao has fallen 7.41%. As the gap with the index widened, their combined market cap ratio dropped to 1.48% from 3.53% three years ago.
Both stocks remain far below their all-time highs. Naver trades at 250,000 won, down approximately 46% from its intraday peak of 465,000 won in July 2021. The company has fallen from third to 19th place in the Kospi market cap rankings. Kakao has fared worse, plunging about 67% to 57,500 won from its June 2021 high of 173,000 won.
Data from Naver Pay's asset management service shows the average purchase price among 106,191 Naver investors is 274,981 won, with an average return of negative 9.45%. Kakao investors face steeper losses: 110,993 shareholders hold at an average price of 89,542 won, suffering an average loss of 36.01%.
Supply-demand dynamics have added pressure. In February, institutional investors sold 290.4 billion won of Naver and 67.8 billion won of Kakao, making them the first and seventh most net-sold stocks respectively. Foreign investors also offloaded 233.6 billion won of Naver and 177.4 billion won of Kakao. Retail investors, meanwhile, bought a combined 790.5 billion won of both stocks.
Naver posted record results last year, with revenue and operating profit rising 12.1% and 11.6% respectively. Kakao, set to report earnings on March 11, is expected to show operating profit growth of around 50%. Yet neither company has demonstrated a clear breakthrough in artificial intelligence monetization, disappointing investors. Recent privacy controversies—including exposure of response histories on Naver's Q&A service and data collection on user patterns—have also weighed on sentiment.
Analysts say earnings improvement alone will not be enough to break the stocks out of their trading ranges. While Naver's AI-driven growth narrative remains intact, a decisive catalyst is still lacking.
"Naver will expand into global markets centered on consumer-to-consumer transactions, moving beyond its domestic business structure where growth was limited," said Lee Ji-eun, analyst at Daishin Securities. "But in the short term, slowing core business growth will be highlighted first, and it will take time for expectations about new businesses to be reflected in the stock price."