Data Privacy Burdens And Stiff Competition Will Hamper Prospects

Key Takeaways

• Rising regulatory and structural costs, combined with digital fatigue, are compressing margins and slowing both revenue growth and user engagement for Soop.
  
• Heavy reliance on advertising and challenges in international expansion make Soop especially vulnerable to market volatility and competitive threats.
  
• Diverse revenue streams, AI-driven personalization, international expansion, and fintech integration position Soop for sustained growth and improved profitability despite rising competition and costs.

Catalysts

Operates as an entertainment company in South Korea.

• The ongoing intensification of data privacy regulations globally is expected to materially raise compliance costs and restrict user data collection for Soop, which would undermine the effectiveness of its AI-driven personalization and advertising technologies, consequently weakening both future revenue growth and net margins.
  
• Mounting digital fatigue and shifting consumer preferences are likely to dampen long-term user growth and reduce engagement levels on interactive platforms, posing a persistent threat to Soop's ability to drive sustained increases in platform revenue and average revenue per user.
  
• The macro-level fragmentation of the internet, including data localization requirements and walled garden environments, could meaningfully hinder Soop's ambitions for international expansion, increasing operational overhead and complicating localization efforts, ultimately limiting risk-adjusted revenue streams and suppressing margin expansion.
  
• Soop's heavy dependence on advertising revenue, coupled with growing competition from both established and emerging digital platforms, makes the company especially vulnerable to ad market volatility, economic downturns, and downward pressure on CPMs, which exposes near
• and long-term earnings to significant instability.
  
• Escalating costs related to content rights, cybersecurity, and content moderation-as the company pursues exclusive event rights and global expansion-have already outpaced top-line growth in recent quarters, and this structural cost inflation is likely to compress operating margins and net income in the future, further detaching valuation from sustainable earnings power.

Soop Future Earnings and Revenue Growth

Assumptions

• This narrative explores a more pessimistic perspective on Soop compared to the consensus, based on a Fair Value that aligns with the bearish cohort of analysts.
• The bearish analysts are assuming Soop's revenue will grow by 9.4% annually over the next 3 years.
• The bearish analysts assume that profit margins will shrink from 24.2% today to 18.8% in 3 years time.
• The bearish analysts expect earnings to reach ₩104.9 billion (and earnings per share of ₩9037.78) by about August 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 bearish analyst cohort, the company would need to trade at a PE ratio of 9.1x on those 2028 earnings, up from 8.1x today. This future PE is lower than the current PE for the KR Interactive Media and Services industry at 18.8x.
• 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 8.21%, as per the Simply Wall St company report.

Soop Future Earnings Per Share Growth

Risks

• Soop's aggressive investment in proprietary AI tools for streamers and viewers, including SOOPi and SARSA, positions the company to benefit from the secular trend of AI-driven hyper-personalization and automation, which could increase engagement, improve operational efficiency, and support higher net margins and long-term earnings.
  
• The company's strong growth in branded content ads and rapid integration of PlayD, along with partnerships with major global gaming publishers, suggests expanding revenue streams beyond traditional platform revenue, which can drive top-line revenue growth and reduce reliance on more volatile income sources.
  
• Expansion into international markets, evidenced by exclusive Chinese broadcasting rights and new contracts in countries like Thailand and Taiwan, is diversifying Soop's user base and content reach, which supports stabilizing and even accelerating revenue growth while spreading regional risk.
  
• The increased traction in sponsorship, donations, and e-commerce initiatives, including live commerce and synergy with PlayD, aligns Soop with long-term industry trends of integrating fintech and direct monetization within creator-driven ecosystems, which may enhance average revenue per user and improve long-run profitability.
  
• Despite fiercer competition and rising costs, the overall market for interactive content, streaming, and virtual streamers continues to grow globally, suggesting that Soop could capitalize on secular industry expansion, thus supporting sustained increases in platform usage, ad revenues, and community-led monetization, which in turn could strengthen long-term earnings and net margins.

Valuation

• The assumed bearish price target for Soop is ₩75000.0, which represents the lowest 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 more bearish 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 bearish analysts, you'd need to believe that by 2028, revenues will be ₩558.6 billion, earnings will come to ₩104.9 billion, and it would be trading on a PE ratio of 9.1x, assuming you use a discount rate of 8.2%.
  
• Given the current share price of ₩78500.0, the bearish analyst price target of ₩75000.0 is 4.7% lower. The relatively low difference between the current share price and the analyst bearish price target indicates that the bearish analysts believe on average, the company is fairly priced.
  
• 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.