Naver Corp., the nation’s largest search portal, faces an unexpected bump in its global mobile messaging business.
Facebook’s recent acquisition of fast-growing messaging start-up WhatsApp dealt a blow to the stock value of Naver. Shares of the Internet heavyweight rebounded 2 percent on Friday, following an 8 percent plunge on Thursday. Regarding the outlook for Naver Corp.’s overseas mobile messaging business, however, industry watchers still remain skeptical.
As part of efforts to go global, Naver Corp. has heavily focused on its mobile messaging app Line for the past few years. The move came after the company faced slow growth in its search engine advertising sales and the government’s tightened regulations on portal companies.
Based on the success of Line in Asian markets, including Japan, it aims to expand its client bases into the U.S. and European countries down the road.
Early this month, its chief financial officer Hwang In-joon said in a conference call, “Naver will make more efforts to secure subscribers in the United States this year.”
However, things turned sour with the announcement that the global online social networking service Facebook, which has 1.2 billion subscribers, has bought WhatsApp. WhatsApp, the global No. 2 mobile messenger with 450 million subscribers, has more than an 80 percent market share in Brazil, Germany, Portugal and Spain.
“It will be difficult for Naver to lure subscribers aggressively in the European and U.S. markets as WhatsApp has dominant leadership in those areas,” said Hong Jong-gil, a stock analyst at Seoul-based Korea Investment.
Further, Line’s solid foundations in Asian markets may begin to crack. “On the back of the global Internet giant Facebook, Line may face fiercer competition with WhatsApp and Chinese company WeChat even in the Asian markets,” an industry source said.
The recent acquisition by Japan’s Rakuten of Viber also seems to be a threat to Line’s Japanese market, where around 80 percent of Line’s sales are generated. Rakuten is Japan’s biggest electronic commerce and Internet company.
Despite rising concerns over Naver Corp.’s overseas business growth, the company played down the impact of global deals.
Naver’s spokesperson said on Thursday, “The rebound of shares in one day proves that the growth potential of Line overseas remains intact after Facebook’s acquisition deal with WhatsApp.”
By Shin Ji-hye (email@example.com