Shares of online comic platform Webtoon Entertainment jumped more than 80% yesterday, August 13, hitting their highest level in over a year. The gains came on two announcements by the company: a partnership with Disney to publish comics from franchises such as Spider-Man and Star Wars, and quarterly results that beat Wall Street expectations. In the wake of the news, three analysts have raised their target prices for the stock.

Details

Webtoon shares surged 81.2% yesterday to $16.96 per share, their highest close in about a year (the last time the stock traded at these levels was August 8, 2024, when it ended the session at $20.63 per share). In early trading today, the rally continued, with shares gaining more than 2% in the first minutes.

The jump came after the company delivered two big announcements. First, it said it had reached an agreement with Disney to "bring iconic comics from the Disney, Marvel, 20th Century Studios, and Star Wars brands to WEBTOON’s mobile vertical-scroll format," including Amazing Spider-Man (2022-present), Avengers (2012), and Star Wars (2015).

“This partnership is expected to accelerate user growth by introducing new stories in a vertical scrolling format, appealing to Gen Z consumers,” CFO David Lee said on the earnings call.

Webtoon also reported second-quarter results. Revenue rose 8.5% year over year to $348.3 million, or 5.5% to $338.7 million on a constant-currency basis. The net loss narrowed nearly 20-fold to minus $3.9 million, while adjusted EPS came in at $0.07, down from $0.18 a year earlier.

For the third quarter, the company guides for constant-currency revenue growth of 9.4-12.2%, to $380-390 million. The outlook excludes any potential impact from the Disney deal, which Lee described as a long-term driver.

What analysts say

Webtoon's revenue and adjusted EPS beat Wall Street expectations, Zacks noted, with EPS coming in at 2.5 times the consensus estimate of $0.02.

Yesterday, three Wall Street analysts raised their target prices for the company’s shares, according to Yahoo Finance. Morgan Stanley lifted its target price by 10% to $11 per share, Evercore ISI by 15% to $23 per share, and Goldman Sachs by 36% to $15 per share. All three have "buy" ratings on Webtoon.

However, there were negatives in the earnings, GuruFocus noted. The company reported a 7.6% drop in subscribers, driven mainly by losses in Korea. EBITDA more than halved year over year to $9.7 million.

According to MarketWatch, eight Wall Street analysts currently cover the company. Five rate the stock a "buy," while three have it as a "hold." The average target price is $14.50 per share, below the current market price.

The AI translation of this story was reviewed by a human editor.

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