South Korea’s leading internet portal operator, Naver Corp., plans to buy back and retire 6 million shares, valued at approximately 400 billion won ($306 million), by the end of this year. Despite strong business performance in 2023, Naver’s stock price has struggled to gain traction.
According to a regulatory filing on Monday, Naver will repurchase 2,347,500 shares between October 2 and December 28.
The shares, which represent 1.5% of Naver’s total shares issued, will be canceled on December 31. This buyback is separate from a three-year program announced in May 2022, under which Naver plans to buy back and cancel 3% of its total shares.
Despite solid earnings, Naver’s stock has seen a significant decline, dropping 23.9% over the past nine months. Although the announcement initially boosted Naver’s share price to 177,300 won, the stock closed down 0.6% at 169,400 won on Monday.
Dividends From A Holdings
Naver will fund half of the buyback with dividends from A Holdings Corp., a joint venture between Naver and Japan’s SoftBank Corp.
A Holdings sold a stake in LY Corp., Japan’s leading mobile messenger app Line, as part of a tender offer aimed at maintaining LY’s status on the Tokyo Stock Exchange.
Following the sale, A Holdings’ ownership in LY dropped to 62.5%, down from 63.56%. Naver has faced pressure from the Japanese government to reduce its control over Line due to concerns about data privacy issues.
Concerns About Future Growth
While Naver reported record-high operating profit and sales in Q2 2023, investor confidence remains low, with doubts surrounding the company’s growth potential. The breakup with its Japanese partner and competition in the AI sector have contributed to the stock’s struggles.
Naver has high hopes for its AI platform, HyperCLOVA X, but investors remain cautious. Despite these challenges, Naver executives, including CEO Choi Soo-yeon, have been purchasing company shares to support stock value, though these efforts have yet to see significant results.
Source: Naver press release