Kakao Pay shares plummeted when it was revealed that Alipay, the company’s second-largest shareholder, was planning to sell 5 million shares in a block sale, accounting for nearly 10 percent of Alipay’s overall interest in Kakao Pay. Kakao Pay’s stock dropped 15.57 percent to settle at KRW 89,500 (USD 69.95).
Despite the deal, Kakao Pay, the payment arm of the IT giant, claimed Alipay will remain a strategic investor and the second-largest shareholder, with 34.72 percent of Kakao Pay shares, and the two companies’ solid collaboration will continue.
Experts, on the other hand, believe this is the start of a bad trend. According to a local securities analyst, Alipay’s block deal still poses a danger of overhang, according to The Korea Herald. “Alipay holds a lot more Kakao Pay shares, so it could sell some of the remaining amount or more. This possibility of dumping off shares has a negative impact for other shareholders as it was seen in today’s price drop,” the analyst said.
According to Park Sang-hyun, an insight provider at independent investing research network Smartkarma, Alipay’s return on its Kakao Pay investment is ten times, so it is normal to make a profit to some level.