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WEBTOON Entertainment Inc (WBTN)
NASDAQ:WBTN
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WEBTOON Entertainment Inc
(NASDAQ:WBTN)
51Neutral
Positive Factors
Financial Performance
WBTN reported solid 1Q results, with constant-currency revenue 2% above estimate and EBITDA $1mn (36%) above expectations.
Growth Strategy
WBTN offers an attractive long-term growth story with a favorable risk-reward skew due to a data-rich platform, Naver-backed AI integration, and a long pipeline of Originals and adaptations.
Negative Factors
Market Risks
WBTN faces downside risks such as slower-than-expected monetization in Japan and North America and inconsistent trajectory of IP adaptation revenue.
User Growth Challenges
User growth was weaker than expected, as total MAUs declined 11% year over year.
WEBTOON Entertainment Inc (WBTN) vs. S&P 500 (SPY)
Market Cap
$1.17B
Dividend YieldN/A
Average Volume (3M)389.67K
Price to Earnings (P/E)―
Beta (1Y)1.06
Revenue Growth3.71%
EPS Growth-42.60%
CountryUS
Employees1,800
SectorTechnology
Sector Strength76
IndustrySoftware - Application
Share Statistics
EPS (TTM)-0.17
Shares Outstanding130,188,780
10 Day Avg. Volume499,316
30 Day Avg. Volume389,670
Financial Highlights & Ratios
PEG Ratio-3.13
Price to Book (P/B)0.80
Price to Sales (P/S)0.00
P/FCF Ratio250.78
Enterprise Value/Market Cap0.54
Enterprise Value/Revenue0.15
Enterprise Value/Gross Profit1.86
Enterprise Value/Ebitda-1.48
Forecast
1Y Price Target
$12.00Price Target Upside33.78% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering6
WEBTOON Entertainment Inc Business Overview & Revenue Model
Company DescriptionWEBTOON Entertainment Inc. operates a storytelling platform worldwide. The company's platform allows a community of creators and users to discover, create, and share new content. Its platform offers stories primarily in two ways, including web-comics, a graphical comic-like medium; and web-novels, which are text-based stories. The company was founded in 2014 and is headquartered in Los Angeles, California. WEBTOON Entertainment Inc. operates as a subsidiary of NAVER Corporation.
How the Company Makes MoneyWEBTOON Entertainment Inc generates revenue primarily through a freemium business model. Key revenue streams include advertising, where ads are displayed within the app and on the website, and in-app purchases, where users can buy digital currency to access premium content, such as early releases of episodes or exclusive stories. Additionally, WEBTOON leverages strategic partnerships with other media and entertainment companies to expand their IPs into new formats like films, television series, and merchandise, contributing to their earnings. The company also monetizes through licensing agreements, allowing other platforms to distribute their content.
WEBTOON Entertainment Inc Financial Statement Overview
Summary
WEBTOON Entertainment Inc. is facing significant financial challenges, particularly with its income statement where revenue has fallen dramatically. While the balance sheet remains relatively stable with a strong equity position and low debt levels, the company's profitability metrics are weak. Cash flow generation shows some promise but remains inconsistent. The company needs to address its operational inefficiencies and revive revenue growth to improve its financial standing.Income Statement
WEBTOON Entertainment Inc. has faced significant challenges on its income statement. The company reported zero revenue in the latest period, which is a substantial decline from the previous year. The gross profit margin and net profit margin are negative, indicating cost pressures and inefficiencies. Revenue growth is non-existent, and both EBIT and EBITDA margins are deeply negative, reflecting ongoing operational losses.25
Negative
Balance Sheet
The balance sheet shows a moderate level of stability. The debt-to-equity ratio is low, suggesting limited leverage risk, and the equity ratio is relatively healthy, indicating a strong equity position. However, the return on equity is negative due to the company's losses, which impacts overall attractiveness.60
Neutral
Cash Flow
Cash flow analysis reveals a mixed picture. The company has managed to generate positive free cash flow in the latest period, but the growth rate has been volatile. The operating cash flow to net income ratio indicates some degree of cash generation capability despite net losses, which is a positive sign. However, the free cash flow to net income ratio remains a concern.55
Neutral
| Breakdown | ||
| Dec 2024 | Dec 2023 | Dec 2022 |
|---|---|---|
| Income Statement | Total Revenue | |
| 1.35B | 1.28B | 1.08B | Gross Profit |
| 339.07M | 295.49M | 269.71M | EBIT |
| -100.70M | -36.36M | -114.72M | EBITDA |
| -113.09M | -96.81M | -84.47M | Net Income Common Stockholders |
| -143.91M | -116.45M | -129.87M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |
| 598.73M | 251.62M | 279.71M | Total Assets |
| 1.94B | 1.78B | 2.02B | Total Debt |
| 17.24M | 33.44M | 53.56M | Net Debt |
| -555.16M | -198.31M | -226.15M | Total Liabilities |
| 378.87M | 429.13M | 505.13M | Stockholders Equity |
| 1.47B | 1.25B | 789.59M |
| Cash Flow | Free Cash Flow | |
| 4.73M | -7.54M | -161.80M | Operating Cash Flow |
| 17.88M | 14.80M | -140.61M | Investing Cash Flow |
| -17.28M | -51.98M | -76.11M | Financing Cash Flow |
| 353.87M | -6.50M | 375.75M |
WEBTOON Entertainment Inc Technical Analysis
Negative
8.97
Price Trends
8.64
Positive
10.34
Negative
11.38
Negative
Market Momentum
0.09
Positive
50.04
Neutral
36.49
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For WBTN, the sentiment is Negative. The current price of 8.97 is below the 20-day moving average (MA) of 9.13, above the 50-day MA of 8.64, and below the 200-day MA of 11.38, indicating a neutral trend. The MACD of 0.09 indicates Positive momentum. The RSI at 50.04 is Neutral, neither overbought nor oversold. The STOCH value of 36.49 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for WBTN.
WEBTOON Entertainment Inc Risk Analysis
WEBTOON Entertainment Inc disclosed 74 risk factors in its most recent earnings report. WEBTOON Entertainment Inc reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
WEBTOON Entertainment Inc Peers Comparison
Overall Rating
UnderperformOutperform
Sector (60)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
72 Outperform | $962.90M | 511.30 | 4.15% | ― | 30.64% | ― | |
72 Outperform | $774.30M | 48.21 | 4.29% | ― | -0.05% | 23.22% | |
66 Neutral | $1.60B | 231.83 | 2.81% | ― | 22.75% | -47.45% | |
60 Neutral | $11.59B | 10.44 | -7.23% | 2.94% | 7.46% | -10.66% | |
57 Neutral | $1.11B | ― | 75.95% | ― | -6.81% | 85.11% | |
54 Neutral | $595.99M | ― | -46.57% | ― | -2.39% | -2961.26% | |
51 Neutral | $1.17B | ― | -12.81% | ― | 3.71% | -42.60% |
* Technology Sector Average
Performance Comparison
WBTN
WEBTOON Entertainment Inc
8.97
-13.86
-60.71%
PRCH
Porch Group
10.78
8.25
326.09%
DSP
Viant Technology
15.39
5.38
53.75%
BMBL
Bumble
5.77
-6.44
-52.74%
SEMR
SEMrush Holdings
10.78
-5.32
-33.04%
VMEO
Vimeo
4.70
0.70
17.50%
WEBTOON Entertainment Inc Earnings Call Summary
Earnings Call Date:May 13, 2025
(Q1-2025)
| % Change Since: -8.93%|
Next Earnings Date:Aug 07, 2025
Earnings Call Sentiment Neutral
WEBTOON Entertainment's Q1 2025 results show strong performance in Japan and growth in advertising and IP adaptation revenues. However, the company faced challenges with a decline in overall MAU, a net loss, and significant issues with the Wattpad platform. While there are positive signs in key markets like Japan, the overall financial metrics indicate a need to address operational challenges.Q1-2025 Updates
Positive Updates
Strong Revenue Performance in Japan
Japan represented over 50% of revenue in Q1 2025, with all three business segments (paid content, advertising, and IP adaptations) experiencing growth. LINE Manga ranked number one in the overall app ranking chart for revenue, including mobile games.
Successful IP Adaptations
The adaptation of the Wattpad key title, Marla Influencia, launched on Netflix, continuing the company's success in Spanish-language content.
Innovative Product Changes
Product changes in the English language platform showed a 9% increase in episodes read by the test group compared to the control group. This included improvements in user onboarding and content discovery.
Growth in Advertising Revenue
Advertising revenue grew by 13.6% year-over-year on a constant currency basis, driven by strong performance in Korea and Japan.
IP Adaptation Revenue Growth
IP adaptation business revenue increased by 20.7% year-over-year on a constant currency basis, with double-digit growth in Korea and triple-digit growth in Japan.
Negative Updates
Net Loss and Decline in Adjusted EBITDA
The company reported a net loss of $22 million compared to a net income of $6.2 million in the prior year, driven by higher general and administrative expenses and marketing costs. Adjusted EBITDA was $4.1 million, down from $22.2 million in the same quarter of 2024.
Decline in Monthly Active Users (MAU)
Total company MAU was down 10.5% in the quarter, primarily due to issues with Wattpad, including a security upgrade affecting search engine indexing and a government ban in one country.
Rest of World Revenue Decline
Revenue in the rest of the world declined by 4% year-over-year on a constant currency basis, impacted by declines in paid content, advertising, and IP adaptation.
Challenges with Wattpad Platform
Wattpad faced significant disruptions due to a security upgrade and a government ban, which were major contributors to the decline in rest of world MAU.
Company Guidance
During the first quarter of 2025, WEBTOON Entertainment reported strong financial results, with revenue and adjusted EBITDA both reaching the upper end of their guidance range due to robust performance in Japan, which contributed over 50% of the total revenue. The company achieved a revenue growth of 5.3% on a constant currency basis, despite a reported revenue being flat year-over-year, influenced by tough comparisons from the previous year. The net loss for the quarter was $22 million, attributed to increased general and administrative expenses and higher marketing costs. Adjusted EBITDA was $4.1 million, down from $22.2 million in the prior year, with adjusted earnings per share at $0.03. The company's metrics showed a 10.5% decrease in total company MAU, primarily driven by declines in the rest of the world, specifically Wattpad, which faced challenges from a security upgrade and a government ban. Despite these challenges, there was a 4.2% increase in webcomic app MAU, particularly in English-speaking markets, with a 19% growth on the English platform. The company also achieved a 13.6% growth in advertising revenue and a 20.7% increase in IP adaptation revenue, with significant growth in Japan across all three revenue streams. Looking ahead, WEBTOON Entertainment expects second-quarter revenue growth of 2.2% to 5.2% on a constant currency basis, with anticipated revenue between $335 million and $345 million. They also foresee an adjusted EBITDA margin between 0.1% and 1.6%, maintaining a focus on marketing investments and infrastructure improvements.Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.