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On Wednesday, Goldman Sachs analyst Eric Sheridan adjusted the price target for Webtoon Entertainment Inc (NASDAQ:WBTN) to $11.00, down from the previous target of $15.00, while continuing to endorse the stock with a Buy rating. The company, currently valued at $1.28 billion, has shown strong momentum with a 6.37% gain in the past week, despite being down 57% over the last year. Sheridan’s decision follows Webtoon’s first-quarter earnings report for 2025. According to InvestingPro analysis, the stock appears slightly undervalued based on its comprehensive Fair Value model.
In the earnings report, Webtoon management highlighted several key points, including revenue and adjusted EBITDA figures that met or exceeded their prior expectations. While the company maintains healthy liquidity with a current ratio of 2.63, InvestingPro data reveals challenges with gross profit margins at 24.37%. This performance was attributed to robust results from the company’s Japan operations and operational efficiencies. Management also emphasized the potential for growth in brand awareness, scaling of local language content, and narrowing the gap between user engagement and monetization.
Furthermore, Webtoon is planning to implement a series of platform changes. These updates include acquiring new content through partnerships with comic publishers such as IDW Publishers and revising the app’s user interface. The company is also concentrating on long-term investments in the platform, which are expected to contribute to an expansion of operating margins over the medium to long term.
Sheridan’s report suggests that investor discussions in the near term will likely focus on the growth of Webtoon’s user base, particularly the geographic origin and rate of growth, as well as the company’s ability to enhance user monetization. Another area of interest is the level of competition Webtoon faces in content and user acquisition, especially in key markets like Japan and Korea.
Despite the reduction in the price target, Goldman Sachs remains optimistic about Webtoon’s prospects, maintaining a Buy rating for the stock. The revised 12-month price target reflects an update to operating forecasts based on the latest earnings report and management’s forward-looking statements. For deeper insights into Webtoon’s valuation and growth potential, investors can access comprehensive analysis and additional ProTips through InvestingPro’s detailed research reports, available for over 1,400 US stocks.
In other recent news, Webtoon Entertainment Inc. reported its Q1 2025 earnings, revealing a net loss of $22 million despite a 5.3% revenue growth on a constant currency basis. The company’s revenue remained flat year-over-year, with significant growth in Japan, accounting for over 50% of Q1 revenue. Adjusted EBITDA dropped significantly to $4.1 million from $22.2 million a year earlier. Future revenue guidance indicates up to 5.2% growth for Q2 2025, with expected revenue ranging from $335 million to $345 million. Despite these challenges, Evercore ISI analyst Mark Mahaney maintained an Outperform rating for Webtoon, though he adjusted the stock price target from $23.00 to $20.00. Mahaney noted a deceleration in revenue growth and a decline in global monthly active users, yet he cited a "unique Long Thesis" for the company. The company’s focus on product innovation and market expansion, particularly in the English-speaking market, remains a priority. Webtoon plans to continue investing in marketing and product improvements to drive future growth.
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