Naver shares in freefall as Nvidia investment fails to lift stock

"Good news doesn't work anymore," one Naver investor said.

"It's a good company, but a bad stock," said another.

Naver's share price has been plunging to historic lows even as positive news continues to emerge. When Nvidia's $1 billion investment in the company was confirmed Friday, the stock still tumbled to 165,000 won during trading — a sign that even major good news cannot arrest the decline.

After the announcement, Naver shares rose 4.13 percent in after-hours trading Saturday, but fell even further when regular trading resumed.

Naver said Nvidia will invest $1 billion in the company on Friday, becoming its third-largest shareholder.

Earlier, Naver signed a new share subscription agreement with Nvidia on July 24 and decided to issue new shares through a third-party allotment. At the time, Nvidia set a condition requiring Naver to secure at least $9 billion worth of computing infrastructure for AI factory expansion, separate from the $1 billion investment. Naver recently signed a related agreement with Brookfield, satisfying that prerequisite.

"Much of the concern that had been raised about whether Naver's business would proceed will be substantially resolved," said Ahn Jae-min, an analyst at NH Investment & Securities.

Shareholders who had hoped the confirmed Nvidia investment would lift the stock were left stunned. The share price, which had topped 300,000 won earlier this year, has collapsed to near historic lows. Many investors are said to have bought Naver shares at peak prices between 280,000 and 300,000 won, leaving a significant number sitting on losses of roughly 50 percent.

"I thought the share price would go up, but it fell even further," one Naver shareholder said.

Brokerages have been issuing upbeat reports on Naver, citing the removal of uncertainty, but the positive assessments have done little to move the stock.

Weak earnings and concerns about competition with global tech giants in AI appear to be weighing further on the share price. Naver posted a sharply disappointing earnings result in the second quarter of this year, and third-quarter results are also expected to fall short of expectations.

Hana Securities set a target price of 400,000 won for Naver. The brokerage projected that sales from the NeoCloud business would grow from 1.06 trillion won next year to 3.36 trillion won in 2028, with operating profit rising from 273.8 billion won to 1.07 trillion won over the same period. NeoCloud provides GPU computing resources for AI development and operations.

KB Securities also forecast earnings contributions beginning in the first half of next year, saying that as customer acquisition becomes more concrete, it will have a positive effect on the share price.

Brokerages have been issuing strong buy calls on Naver, with analysts saying "now, with no expectations priced in, is the best time to buy" and "this is the investment opportunity."

The deeper problem, however, may not be Naver itself but the nature of South Korea's stock market, which has become more driven by foreign investor flows and global macroeconomic variables than by corporate fundamentals. With the market increasingly seen as a playground for foreign investors where even good news fails to gain traction, a sustained recovery in Naver's share price remains far from certain.