Webtoon Entertainment, the first Korean content company to be listed on the New York Stock Exchange, is experiencing a challenging start. Initially capturing attention with an IPO price set at the top end of the expected range at $21 per share, the stock price has fallen below this mark within just four trading days and has not recovered for over 13 trading days. Analysts attribute the decline to concerns over the company’s growth, highlighted during the IPO process.
According to Nasdaq on July 21, Webtoon Entertainment (WBTN) closed below its IPO price of $21 for 13 consecutive trading days from July 2 to July 19. The stock had shown a promising start, closing at $23 on its first trading day, up 9.5% from the IPO price. However, it fell to $20.07 by the fourth trading day, July 2, and dropped further to $19.65 on July 5, breaking below the $20 mark.
Webtoon Entertainment is the headquarters of Naver Webtoon, which began its service in 2005. Naver Webtoon launched its English service in 2014 and established Webtoon Entertainment in the U.S. in 2016. In 2020, Webtoon Entertainment became the headquarters, with Naver Webtoon restructured as its subsidiary. This strategic move aimed to leverage the large U.S. content market to become a global intellectual property (IP) company. This year, Webtoon Entertainment became the first webtoon platform to be listed on the New York Stock Exchange.
Market observers cite Naver Webtoon’s sluggish growth as a key factor in the stagnant stock price. In the first quarter of this year, Naver Webtoon’s global monthly active users (MAU) stood at 169 million, similar to the 167 million in 2022. The number of paid users (MPU) saw a modest increase from 7.6 million to 7.8 million over the same period. However, MAUs in the U.S. and Europe decreased from 136 million to 123 million.
Furthermore, the company is not yet generating stable profits. Last year, Webtoon Entertainment reported a net loss of $144.8 million, with accumulated losses reaching $363.3 million by the end of the year. Although it posted a net profit in the first quarter of this year, Webtoon Entertainment noted in its registration statement that it has a history of net losses and expects increased costs in the future, which may prevent it from achieving or maintaining profitability.
