Accelerated Digitalization And AI Will Elevate Global Engagement

Key Takeaways

• AI-driven features and ecosystem enhancements have the potential to transform user engagement, productivity, and margins, setting the stage for self-sustaining revenue growth.
  
• Convergence of streaming cultures, global rebranding, and localized content strategies are likely to fuel rapid user base expansion and long-term top-line growth.
  
• Mounting costs, regulatory headwinds, and reliance on a narrow product set threaten profitability and expose Soop to revenue risks if innovation and diversification lag.

Catalysts

Operates as an entertainment company in South Korea.

• Analyst consensus expects AI-driven features like SOOPi, Savic, and SARSA to incrementally boost growth, but these in-house AI advancements could fundamentally reshape user engagement and streamer productivity, driving a step-change in subscription-based revenue and transforming net margins as the ecosystem becomes increasingly self-sustaining.
  
• While analysts broadly project international streamer adoption and content localization to drive gradual revenue expansion, the accelerating convergence of Korean and local streaming cultures-especially visible radio, esports, and co-hosted simulcasts in markets like Taiwan and Thailand-could ignite rapid, viral growth in both ARPU and total user base, materially outperforming current revenue and earnings forecasts.
  
• Soop's major rebranding campaign and global marketing programs, launching for the first time in its operating history, are likely to create an outsized surge in brand visibility; combined with multi-channel local-language efforts, these campaigns could rapidly compress customer acquisition costs and propel a sustained lift in global user acquisition and top-line growth.
  
• As digitalization deepens and global internet access expands, Soop stands to disproportionately capture the influx of next-generation content creators and consumers, leveraging its scalable platform and localized content strategy to command a much larger share of the global addressable market-accelerating both revenue and high-margin growth.
  
• The integration of PlayD and synergies with existing subsidiaries position Soop at the forefront of performance marketing and branded content; this could transform its advertising business model into one of the most data-rich and high-ROI offerings in the region, delivering double-digit growth in ad revenue and driving a structurally higher operating profit margin profile over the medium
• to long-term.

Soop Future Earnings and Revenue Growth

Assumptions

• This narrative explores a more optimistic perspective on Soop compared to the consensus, based on a Fair Value that aligns with the bullish cohort of analysts.
• The bullish analysts are assuming Soop's revenue will grow by 15.8% annually over the next 3 years.
• The bullish analysts assume that profit margins will shrink from 24.2% today to 24.0% in 3 years time.
• The bullish analysts expect earnings to reach ₩159.0 billion (and earnings per share of ₩13754.27) by about July 2028, up from ₩103.3 billion today. The analysts are largely in agreement about this estimate.
• In order for the above numbers to justify the price target of the more bullish analyst cohort, the company would need to trade at a PE ratio of 13.5x on those 2028 earnings, up from 9.4x today. This future PE is lower than the current PE for the KR Interactive Media and Services industry at 20.7x.
• Analysts expect the number of shares outstanding to remain consistent over the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 8.18%, as per the Simply Wall St company report.

Soop Future Earnings Per Share Growth

Risks

• User growth in core geographies appears to be stabilizing, as management notes that while active streamers and simulcast numbers are rising, this is "not a big margin," suggesting that without breakthrough product or market innovation, future revenue growth may be constrained.
  
• Rising fixed costs, especially employment expenses and content production costs (which surged 155% year-over-year), signal mounting pressure on operating margins that could erode net income if monetization does not keep pace with investment and wage inflation persists in the industry.
  
• Increasing regulatory scrutiny around data privacy, global expansion, and digital advertising-particularly as Soop integrates services across borders-may restrict user data collection and delay new product rollouts, potentially negatively impacting both revenues and profitability.
  
• As Soop invests heavily in AI and content creation to stay competitive, the persistent need for high R&D and infrastructure spending in the face of escalating digital infrastructure and cybersecurity costs could further strain operating margins and dilute long-term earnings power.
  
• Soop's heavy reliance on a concentrated suite of digital services and gaming content, such as partnerships with specific esports titles like VALORANT and League of Legends, exposes the company to concentration risk-shifts in consumer attention or platform disruption by emerging competitors could swiftly impact both top-line revenue and net income.

Valuation

• The assumed bullish price target for Soop is ₩170000.0, which is the highest price target estimate amongst analysts. This valuation is based on what can be assumed as the expectations of Soop's future earnings growth, profit margins and other risk factors from analysts on the bullish end of the spectrum.
• However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of ₩170000.0, and the most bearish reporting a price target of just ₩75000.0.
• In order for you to agree with the bullish analysts, you'd need to believe that by 2028, revenues will be ₩662.8 billion, earnings will come to ₩159.0 billion, and it would be trading on a PE ratio of 13.5x, assuming you use a discount rate of 8.2%.
• Given the current share price of ₩90900.0, the bullish analyst price target of ₩170000.0 is 46.5% higher.
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.