As Kakao decides to split the face value of 5 to 1, attention is focused on whether it can serve as a positive for the stock price. In general, par value split is expected to show a positive trend for Kakao as it often acts as a positive for the stock price in terms of increasing transaction volume and increasing investor accessibility.
Kakao announced after the closing of the market that it had decided to split the par value from 500 won to 100 won to expand the number of shares in circulation. The trading suspension period is April 12-14, and the scheduled listing date of split new shares is the 15th of the same month.
According to the par value split, the number of Kakao shares will increase five times from the previous 87.76 million shares to 435,232,100 shares. The stock price is also expected to drop to a fifth level from the current 484,500 won.
In general, the par value split works as a positive for the stock price. This is because the stock price seems to have fallen, so individual investors have more access. For this reason, the par value split has been regarded as one of the stock price stimulus measures since the past.
If a company with low accessibility to investors decides to split face value, such as’Emperor’s stock’ with a real stock price exceeding 1 million won, the stock price is lowered, making it relatively easy to buy and sell. Earlier, in the case of Samsung Electronics in 2018, the share price of Samsung Electronics, which had reached 2.5 million won per share, was lowered to a half price, increasing the accessibility of individual investors.
In addition, as the stock price decreases, the number of shares in circulation increases, so the effect of an increase in trading volume can be expected. As there is a saying in the stock market that’stock prices are the shadow of trading volume’, stock price increases are usually based on high trading volumes. For this reason, most of the companies that had split face value in the past tended to show an upward trend in stock prices.
Meanwhile, Park Ji-won, a researcher at Kyobo Securities, suggested a target price of 550,000 won for Kakao in a recent report. If the converted stock price is applied after the par value split, it is KRW 110,000.
Researcher Jiwon Park said, “Kakao will become the first company in Korea to provide practical MaaS (Mobility as a Service) by integrating various means of transportation such as agency, taxi, parking, e-bike, train and intercity bus reservation, and navigation in the Kakao T app. “It is expected to gradually expand its influence in the domestic content industry by establishing its own value chain.”
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