Soaring metaverse stocks face mixed outlook in Korea

The share prices of South Korean metaverse companies have skyrocketed throughout this year, in an environment where fan meetings, press conferences and even public protests are conducted online in a virtual world.

Metaverse, combining “meta” and “universe,” is a shared virtual space that converges virtual and physical realms using augmented reality (AR) and internet technologies. Metaverse has become a key theme among Korean investors who are experiencing a rapid expansion of related technologies and services.  

The leading stock in the metaverse sector is GIANTSTEP Inc., which debuted on Kosdaq on Mar. 24. It specializes in virtual reality (VR) technologies to produce various types of visual content.

The company not only worked with Naver Corp. to produce a contactless concert using its extended reality (XR) technology but also created a commercial for Samsung Electronics Co.’s QLED 8K TV using its VR technology.

One of the major works by GIANTSTEP was the creation of virtual avatars for SM Entertainment Co.’s new girl group aespa.

The company’s stock price has grown by a striking 86.1% just within this month, closing at 103,100 won ($89.68) on July 20. With a market cap of about 1 trillion won ($869 million), its valuation is almost at par with that of YG Entertainment Inc. at 1.05 trillion won ($913 million).

Metaverse companies that specialize in visual effects (VFX) technologies, WYSIWYG Studios Co. and Dexter Studios Co. also saw their share prices rise respectively by 37.5% and 23.3% this month until July 20.

Alchera Inc., an artificial intelligence image recognition (AIIR) company, also enjoyed a 41.5% growth in its share price during the same period. Alchera’s AIIR technology is used in creating avatars on Naver Z Corp.’s Zepeto platform.

“While the Kospi index has been sluggish this month due to the fast spread of the delta variant of COVID-19 in Korea, metaverse is attracting investor attention as a future growth sector,” said a fund manager.

Moreover, AR company MAXST Co.’s IPO subscription last week set a new record in the country by being oversubscribed by more than 6,700 times.

CONCERNS AROUND THE METAVERSE BOOM

At the same time, however, some financial experts note that most of the metaverse firms are making losses and are overvalued.

“GIANTSTEP, even right up to its IPO date, was in trouble financially. Investors must also note that its business portfolio in the metaverse sector is still unclear today,” said a financial expert.

“Likewise, WYSIWYG Studios, lacks a clearly defined long-term vision despite its quick success in extended reality projects,” he added.

Securities analysts also highlight that the share prices have grown too quickly and too drastically in the metaverse segment.

“The market usually overreacts, more than it should, over some period of time when a unique investment theme such as the metaverse surfaces newly,” said an analyst at a major securities firm.

Write to Sul-gi Lee at surugi@hankyung.com
Daniel Cho edited this article.