Naver's Share Price Dynamics: Navigating Volatility and Betting on AI-Driven Growth

The recent leadership transition at Naver, South Korea's tech giant, has sparked a mix of market anxiety and optimism. Former CEO Han Sung-sook's planned sale of 68,934 shares—valued at ₩17.4 billion—has triggered short-term volatility, but the appointment of Han as Minister of SMEs and Startups also sets the stage for long-term tailwinds tied to AI integration policies. For investors, the question is clear: Does the near-term dip present a buying opportunity, or are there lurking risks?

Near-Term Risks: The Stock Sale and Regulatory Overhang

Han's decision to divest her Naver holdings stems from South Korea's Public Service Ethics Act, which mandates officials to liquidate stocks exceeding ₩30 million within two months of taking office. Her sale of shares—primarily from exercised stock options granted in 2019 and 2020—could pressure Naver's short-term price. The shares are set to convert by July 10, and the sale will occur once her ministerial confirmation is finalized.

Critically, Han chose not to exercise 40,000 stock options granted in 2021, as their strike price of ₩384,500 far exceeded Naver's current share price of ₩253,000. This signals that even insiders view the stock as undervalued relative to past highs. However, the sale's timing—amid heightened scrutiny over corporate governance—could amplify near-term volatility.

The stock surged 7.6% on June 23 to ₩290,000 following Han's nomination, but has since retraced. Investors should monitor whether the sale triggers further declines or stabilizes at current levels.

Valuation: Is Naver Oversold?

Naver's current valuation offers a critical lens. The company trades at a price-to-sales (P/S) ratio of 4.5x, down from 6.2x in early 2023, reflecting concerns over its core search and content businesses. However, its AI-driven ventures—such as its HyperCortex platform and partnerships with SMEs—are underappreciated.

Consider this:
- Han's exercised options, priced at an average of ₩158,500, are already underwater compared to current valuations.
- The net profit of ₣3.9 billion from her sale reflects confidence in Naver's long-term prospects.

Relative to Kakao (P/S: 3.8x), Naver's premium may seem unwarranted, but its AI-first strategy and scale in enterprise solutions justify a valuation edge.

Long-Term Catalysts: AI Integration and Policy Winds

The real opportunity lies in the Lee Jae-myung administration's AI push, spearheaded by Han's new role. Key policies include:

1. AX Voucher Program: Provides SMEs with subsidies to adopt AI tools, creating demand for Naver's HyperCortex platform.
2. AI Highway Infrastructure: Regional AI clusters will enhance Naver's edge in data-driven services.
3. Talent Attraction: Visa reforms and R&D funding will bolster Naver's ability to retain top AI engineers.

These policies are not just theoretical. Naver's Q1 2025 AI revenue grew 27% year-on-year, with enterprise contracts up 40%. The government's KRW 100 trillion AI fund—partially directed toward SMEs—could accelerate this trend.

Investment Thesis: Buy the Dip, Bet on Structural Growth

The near-term risks are manageable. Han's sale is a one-time event, and her policy influence could position Naver as a key beneficiary of AI-driven SME growth.

Key Investment Points:
- Valuation Floor: The ₩250,000 level (near current prices) aligns with Han's exercised options' breakeven point, offering support.
- Catalysts to Watch:
- Adoption rates of AX Vouchers by SMEs.
- Partnerships with government-funded AI projects.
- GPU procurement progress (critical for training large language models).

Recommendation: Investors with a 12–18-month horizon should consider accumulating Naver shares below ₩280,000. The stock's role in Korea's tech realignment, coupled with its AI-first moat, makes dips a strategic opportunity.

Conclusion

Naver's short-term volatility is a product of leadership change and regulatory compliance, but the long-term narrative is compelling. With Han steering SME-AI policies from her new post, Naver stands to gain both directly (via contracts) and indirectly (as a symbol of Korea's tech renaissance). For patient investors, the current pullback could mark a rare entry point into one of Asia's most underrated AI plays.

Final Note: Monitor Naver's Q2 earnings (due in July) for clues on AI adoption rates and enterprise momentum.