Naver Plus Store: Subscription Surge vs. Stock Slump—Can Brand Partnerships Sustain Growth?

The digital retail landscape in South Korea is undergoing a seismic shift, and Naver Corporation's Plus Store sits at the epicenter. The platform's 40% surge in Contemporary Brand sign-ups—driven by AI-powered personalization and aggressive promotions—has sparked optimism. Yet, Naver's stock fell 3% in Q2 2025, despite these gains. Is this disconnect a sign of overvaluation, macroeconomic headwinds, or mispriced risks? Let's dissect the data to determine whether Naver's growth story is built to last or risks collapsing under its own hype.

The Surge in Sign-Ups: Short-Term Win or Long-Term Engine?

The 40% metric often cited refers to a purchase conversion rate increase for Naver's AI recommendation engine (4UFAN), not raw sign-up growth. However, the context paints a clearer picture:
- Q2 Promotions: A March 2025 campaign offering 10–15% discounts to 6,000 partner brands likely drove short-term user acquisition. First-time users received 10% coupons, incentivizing sign-ups.
- AI Integration: The standalone Plus Store app, launched in March, now boasts 3,000 brands and 600,000 sellers, leveraging AI to match users with niche products. This “long-tail commerce” model is a deliberate play to compete with Amazon and Alibaba.
- Partnerships Matter: Collaborations like the April 2025 tie-up with Market Kurly (a fresh-goods specialist) expanded Naver's product ecosystem, attracting value-conscious consumers.

The Problem: While sign-ups are up, monetization remains uneven. Naver's Q1 2025 commerce segment grew 10.1% YoY, but QoQ revenue dipped 1.6%, signaling macroeconomic drag on discretionary spending. The company also faces margin pressure: CapEx rose 11.4% YoY on AI infrastructure, while display ad revenue fell 13.8% QoQ.

Why the Stock Fell 3%: Overvaluation, Not Just Growth

Investors punished Naver for three key reasons:

1. Overvalued Multiples:
   Naver's P/E of 20x contrasts sharply with the broader Korean market, where half of companies trade below 12x. Analysts argue this premium assumes 9% annual growth over three years, far below the market's projected 17%. If Naver fails to meet these lowered expectations, its valuation could correct sharply.

2. AI Monetization Lag:
   Naver's AI tools (e.g., HyperCLOVA X) show promise—e.g., AI Briefing handles 1% of factual queries—but monetization is still nascent. B2B AI sales to third-party sellers remain “exploratory,” and enterprise revenue dropped 24.4% QoQ in Q1. Without clear paths to revenue, investors are skeptical.

3. Global and Domestic Competition:
   Rivals like Coupang (domestic) and Temu (global) are eroding market share with faster delivery and lower prices. Naver's focus on premium AI experiences may not offset price-sensitive consumers' shift to discount platforms.

Assessing the Sustainability of Brand Partnerships

The success of Naver's strategy hinges on two factors:

1. Partnerships as a Moat or a Crutch?
   The Naver Plus Membership (launched in Q2) bundles Netflix, free returns, and 5% mileage—appealing to price-sensitive users. However, these perks risk margin erosion if not offset by higher ARPU (average revenue per user). The Market Kurly partnership adds credibility but requires ongoing investment to avoid becoming a cost center.

2. AI's Role in Long-Term Value
   Naver's AI-driven personalization could be its edge. If HyperCLOVA X reduces customer acquisition costs and boosts retention, the 40% conversion rate gain becomes a compounding advantage. Yet, the company must prove this in Q3–Q4 results.

Investment Thesis: Hold for Now, But Mind the Risks

Bull Case:
- Naver's 600,000 sellers and AI-first approach create a defensible moat in Korea's crowded e-commerce market.
- The standalone app's growth (now 50M consumers' go-to) and government AI support (e.g., HyperCLOVA's national backing) suggest long-term tailwinds.

Bear Case:
- Overvaluation risks a multiple contraction if growth slows.
- Macroeconomic headwinds, like a 7.5% drop in Las Vegas tourism, hint at broader consumer caution.

Advice:
- Hold: For now, Naver's ecosystem dominance and AI innovations justify a position. But monitor Q3 results for signs of margin stabilization and AI monetization.
- Avoid Overextending: At 20x P/E, the stock offers little margin of safety. Wait for a pullback to 15x before adding.

Final Verdict

Naver's subscriber surge is real, but its stock's slump reflects deeper concerns: overvaluation, execution risks in AI, and competitive pressures. The brand partnerships are a start, but sustained growth requires translating user engagement into profitable revenue streams. Until then, investors should proceed cautiously—Naver is a long-term bet, not a short-term trade.