Kakao announces plan for 5-for-1 stock split

Logo of Kakao. [KAKAO]

The shares of internet company Kakao went up on Friday after it announced a stock split the previous day aimed at making the purchase of shares more accessible to investors.

Kakao gained 0.72 percent to close at 488,000 won ($435) on Friday.

The tech company announced after the market closed on Thursday that it will lower the face value of its stocks from 500 won to 100 won per share.

Based on the Friday closing price, Kakao shares will be traded at 97,600 won after the change.

The planned 5-for-1 split, set for April 15, will also push up the number of shares from 88,704,620 to 443,523,100.

“The stock split announced Thursday aims to make investing in Kakao more accessible to a broader base of investors,” a spokesperson at Kakao said.

A shareholders’ meeting is set to pass the resolution on March 29.

When companies have seen their stock price rise too much, they often move to lower the face value to ease the price barrier.

The move often translates into an increased influx of retail investors who might otherwise hold back due to the high share price, although it rarely affects the company’s fundamentals.

Most notably, Samsung Electronics decided to split its stock 50-to-1 back in 2018 after its surpassed the $2,000 level.

The number of minority retail investors, whose holding is less than 1 percent, increased five times following the change from around 240,000 in March, 2018 to the 1.45 million in June, 2020.

BY PARK EUN-JEE [park.eunjee@joongang.co.kr]