Naver’s Intention

 

Naver, the company behind messaging app LINE, has announced that it will not list LINE on the stock exchange within the year. So, there is a lot of speculation for the reason why the company changed its course.

On Sept. 22, Naver noted, “We are considering whether or not to list LINE in Japan or the U.S. But LINE's IPO has been decided already,” adding, “At least, we decided that we will not make any attempt to list LINE within the year.”

On Sept. 23, experts in the stock market said that Naver's move can be interpreted as its willingness to expand and sophisticate LINE.

Hong Jon-gil, an analyst at Korea Investment & Securities, explained, “LINE is witnessing the number of subscribers and sales increasing rapidly. Moreover, Naver has sufficient capital. Since there is no urgent need for a cash injection, the company apparently reached the conclusion that this year isn't the right time for LINE's listing.”

Others say that Naver's decision is attributable to its intention to list LINE successfully like Alibaba rather than Facebook. Kwon Yoon-gu, an analyst at Dongbu Securities, remarked, “Facebook went public on the stock exchange in 2012, based on 900 million users. However, after achieving net profits in the first quarter of that year, it posted net losses in the second and third quarters in a row. As a result, its stock price chopped in half only four months after its IPO.” He added, “In the case of Alibaba, which went public on Sept. 19, its IPO price was the highest-ever. So, it can be said that Naver has come to the conclusion that LINE's IPO could be more valued based on profits rather than just relying on a rapid increase in the number of subscribers.”

Previously, industry analysts predicted that LINE would secure capital and make a concerted effort to target overseas markets through its listing. Therefore, some in the industry think that Naver may have already secured additional capital from other sources.

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