Kakao Pay's 'Protection Jesus' is released...  New low price due to concerns about release of 76 million shares

Kakao Pay’s ‘Protection Jesus’ is released… New low price due to concerns about release of 76 million shares

The stock price of Kakao Pay fell sharply on the news of the lifting of the large-scale lock-up. On May 2, Kakao Pay closed at 108,000 won, down 4% from the previous trading day. At one point during the day, it was pushed back to 107,500 won, the lowest since listing.

Kakao Pay was listed on the KOSPI market on November 3, 2021 at an offering price of 90,000 won. The starting price was formed at 180,000 won, and on November 30 of the same year, it rose to 244,500 won at one time, recording the highest price, but has been on a downward trend since then.

The reason for the stock price drop on this day is believed to be that the 76.25 million shares were lifted on May 3, raising concerns about a share price decline due to overhangs (excessive supply). Protected deposit is a system that prevents large shareholders of newly listed companies from selling their stocks for a certain period of time.

In Kakao Pay, six months after listing, the obligation to protect deposits disappeared, making it possible to sell the stock. According to the Korea Securities Depository, a total of 76,246,370 shares of protection will be lifted, including 62,351,920 Kakao Pay listed stocks and 13,894,450 shares allocated to third parties. This volume is equivalent to 57.55% of the number of shares issued.

This includes the amount held by Alipay, the second-largest shareholder. Alipay will now be able to realize profits from the total of 51,015,205 shares of Kakao Pay, which it holds 38.68%. Alipay is an electronic payment service for financial affiliates of Alibaba Group, China’s largest e-commerce company, and it is the second largest shareholder of Kakao and Kakao Pay. At the time, Kakao set a one-year probation period by adding six months of voluntary probation to the six months of legal probation at the time.

Contrary to investors’ uneasy sentiment, securities analysts predict that Kakao Pay’s growth will continue. Even if the protection deposit is lifted, it is analyzed that the amount to be sold on the market is limited and most will be made in the form of block deals (mass trading outside the market). The expectation that Kakao Pay financial service will lead to high added value in the future also supports this.

Jeong Ho-yoon, an analyst at Korea Investment & Securities Co., said, “The domestic Fintech platform is still in its infancy, and there is a lot of room for growth in the future. Kim Dong-woo, an analyst at Kyobo Securities, also judged that “Kakao Pay is expected to improve quarterly growth and has ample room for future growth.”

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