TLDRs;
- Kakao stock dropped 5.85% last week, hit by KakaoTalk redesign backlash and privacy concerns.
- Users complained new feed-style interface exposed too much data, prompting Kakao to restore old features.
- Kakao also faces competition in mobility, with Uber launching a rival ride-hailing membership program.
- AI-driven ChatGPT integration could boost long-term growth, but investors remain cautious about near-term user engagement.
South Korea’s internet giant Kakao Corp. (035720.KS) has seen its stock slide 5.85% over the past week, with an additional 1.16% decline recorded on Monday’s close at ₩59,600.
The fall comes amid intensifying backlash against the company’s controversial KakaoTalk redesign, which introduced a feed-style interface that many users criticized as invasive and more akin to a social media platform than a private messenger.
The user protests center on privacy and usability concerns. Critics argue the update exposes too much personal information while diminishing the app’s core function as a messaging service. Kakao has since announced plans to roll back several changes, including restoring the popular “friends” tab to its original format and allowing users to toggle between old and new display styles.
Market Impact and Investor Sentiment
Investors have responded cautiously to the uproar, with analysts suggesting that while Kakao’s quick response may limit reputational damage, the incident highlights the fragility of user trust in a saturated digital ecosystem.
Shares have been under pressure not just due to user discontent but also from growing competition in both messaging and mobility services. Kakao Mobility recently launched a paid membership program,
Kakao T Members, offering perks for riders and car owners. But with Uber announcing its rival “Uber One” membership at the same price point, investors fear margin pressures could intensify in the ride-hailing space.
Kakao’s AI Gamble With ChatGPT
Adding another layer of complexity, Kakao is simultaneously attempting a bold reinvention of its flagship platform. Just last week, the company revealed that ChatGPT will be directly integrated into KakaoTalk starting October. This marks one of the app’s most ambitious upgrades, signaling Kakao’s broader ambition to evolve into a multifunctional “super app.”
CEO Chung Shin-a described the integration as “a pivotal moment,” promising users seamless access to Kakao’s wider ecosystem, from reservations and gifting to music streaming. OpenAI executives echoed the optimism, calling the move a defining step in embedding world-class AI into everyday Korean life.
Despite the buzz, analysts warn the AI pivot won’t instantly offset short-term declines in user engagement. According to Mobile Index data, the average time spent on KakaoTalk fell 16% between 2021 and 2025, underscoring the urgency behind Kakao’s digital overhaul.
Recovery or Prolonged Struggles?
KakaoTalk still boasts nearly 49 million monthly active users, effectively covering South Korea’s population. Yet the platform is losing ground to global players like YouTube and Instagram in terms of time spent per user.
The redesign backlash, combined with stiffening competition in mobility and e-commerce, highlights the tightrope Kakao must walk between innovation and user satisfaction.
Whether the stock stabilizes will depend on two factors: how smoothly Kakao manages the rollback of unpopular design elements, and whether its AI-powered transformation can re-ignite user loyalty and deliver new monetization streams. For now, investors remain watchful, as the company navigates between repairing trust at home and pursuing ambitious global AI ambitions.
