[Edaily Reporter Kim Hyun-ah ] Kakao(035720)On the day Kakao announced it would split the company into two, the stock market, as expected, reacted first to the word “split.”

On the 21st, Kakao announced that it would undergo a spin-off into “Kakao AI,” which will focus on KakaoTalk and AI businesses, and “Kakao X,” which will oversee major affiliates—including finance, content, and mobility—as well as investments in new global ventures. Immediately after the announcement, the stock price plummeted by more than 12% during the trading session. Although the decline narrowed to the 7% range by the close as foreign investors stepped in to buy, judging solely by the market’s initial reaction, one might conclude that “Kakao’s bold move has backfired from the start.”

However, this decision should not be judged solely based on short-term stock prices. While the spin-off itself is not a magic formula for increasing corporate value, the decision to redesign the bloated organization and overhaul its decision-making structure in the face of the massive inflection point presented by AI is a welcome move in itself.

85% of Subsidiary Matters: Breaking Free from the Shackles of the “Dinosaur Headquarters

” The most notable aspect of this decision is the painful self-reflection Kakao has undertaken.

Kim Do-young, the nominee for CEO of Kakao X, explained that over the past five years, 85% of major decisions made by Kakao’s board of directors and 84% of internal investment reviews over the past year were related to subsidiary matters. This means that at a time when the headquarters should have been focusing on its core future priorities—AI and KakaoTalk—a significant portion of top-level decision-making was tied up in issues concerning affiliates.

As a company grows, its headquarters becomes a massive control tower managing everything. However, in the race for speed in the AI era, this structure can actually hold the company back.

What is needed in the AI race is not just a grand master plan for five years from now. What matters is the agility to make decisions today, turn them into products tomorrow, and quickly roll them out to users.

It is not necessarily efficient to continue keeping the core business—which generates cash—and investment ventures—which bet on future uncertainties—under a single decision-making structure.

This organizational split should be viewed not as “splitting up the company,” but rather as an attempt to regain decision-making speed in line with the AI era.

If we set aside the trauma of the previous asset spin-off

, Of course, there are reasons for the market’s anxiety.

In the past, Kakao faced controversy over the erosion of existing shareholder value during the IPOs of major affiliates such as KakaoBank Corp. and kakaopay. It is natural for the market to react sensitively to the mere mention of the word “spin-off.”

However, this spin-off is structurally different from an asset spin-off. It is a stock spin-off in which existing shareholders receive shares in both companies in proportion to their current ownership stakes—rather than a structure where the newly established company is listed separately as a subsidiary, making it difficult for existing parent company shareholders to directly benefit from the new company’s growth.

Therefore, it is difficult to conclude that this spin-off itself undermined shareholder value based solely on the sharp drop in stock prices on the first day.

There have already been attempts to separate two businesses with different characteristics so that each can be properly evaluated for its own value and growth potential.

In 2021, SKTelecom(017670)carried out a spin-off, separating its core telecommunications business from its semiconductor and ICT investment business into SKTelecom and SKSQUARE(402340). Just as the stock prices of the two companies diverged on the first day of trading resumption, a spin-off is not an event whose success or failure is determined in a single day.

What mattered was what happened afterward. SKTelecom focused on telecommunications and AI infrastructure, while SKSQUARE concentrated on semiconductor investments, each pursuing strategies and capital allocation tailored to their respective businesses.

Kakao must also take note of this point.

“The Two Engines” Must Run at Different Speeds

Kakao AI and Kakao X require different management approaches than when they operated within the same company.

For the newly established Kakao AI, the key challenge is how quickly it can productize new services—such as AI search, agents, advertising, and commerce—and convert them into revenue, leveraging the powerful user base of KakaoTalk, which is used by the vast majority of the population. Rather than merely declaring the adoption of AI, it must demonstrate whether user behavior is changing and whether actual sales and profits are increasing. It must create an Agent AI ecosystem that operates within KakaoTalk.

The situation is different for the existing entity, Kakao X. The key for Kakao X is how efficiently it allocates capital while investing in diverse businesses—such as TechFin (leading the virtual asset ecosystem), content (strengthening global fandom), and mobility (pioneering robotaxis and logistics)—as well as new global ventures. The market will be watching to see whether investment funds are used to identify new growth engines, whether they lead to reckless expansion, and whether the results are returned to shareholders in the form of shareholder returns.

In the AI era, organizations must not remain stuck in a fixed structure. Flexibility—the ability to spin off or merge divisions as needed and concentrate capital and talent on thriving businesses—can become a key source of a company’s competitiveness.

Now it’s Kakao’s turn to respond

. The ball is back in Kakao’s court.

What the market wants to see is not a blueprint explaining the rationale for the split, but the numbers showing what has actually improved since the split into two companies.

Kakao AI must prove how the adoption of AI is transforming the KakaoTalk user experience and boosting the productivity and profitability of TalkBiz. Kakao X must demonstrate that its large-scale investments are not merely reckless expansion, but are creating new growth engines and leading to capital allocation that returns value to shareholders.

Simply declaring that the company has “two engines” is not enough to regain the market’s trust.

Through this spin-off, Kakao has chosen not “two companies” but “two paces.” Kakao AI must move faster, while Kakao X must invest more rigorously.

What the market will evaluate is not the rationale behind the spin-off, but the revenue and profits the two companies actually generate—and whether those results translate into shareholder value.

Can the two engines Kakao has installed actually accelerate growth and ensure that shareholders can tangibly feel the results?

Now it’s Kakao’s turn to answer with numbers.