Before we dive in, what happened on Friday night?
Naver's stock price hit a one-year low in the middle of this month. While the KOSPI more than doubled in a year, Naver was busy digging a basement all by itself.
But last Friday night, news broke from God-America.
Nvidia and Brookfield are investing 14.6 trillion KRW in Naver.
A company that seemed abandoned suddenly had the world's most successful companies showing up with bundles of cash. Even the President was at the announcement.
So, should we go all-in on Monday? Wait... Today's post is a dissection of that 14.6 trillion. After reading this, the 14.6 trillion you know will look a bit different from the actual 14.6 trillion.
1. First, what actually happened?
Last Friday, at an AI event in San Francisco, Naver Chairman Lee Hae-jin spoke directly on stage.
He announced that Nvidia and Brookfield would be investing $10 billion in Naver.
$10 billion is 14.6 trillion KRW. Naver's market cap is around 31 trillion. This means an amount nearly half the company's value is coming in.
What is the money for? Building AI factories. It's a project to expand Naver's data center in Sejong into an AI factory equipped with 100,000 GPUs. Jensen Huang went even further, saying he would relocate Nvidia researchers from California to Korea.
Up to this point, it sounds like massive good news. But if you stop at the headline, is that really an X-file?
2. How much money actually hit the bank account?
The answer is: 0 KRW.
If you break down the announcement, the structure is like this: Nvidia puts in $1 billion. Brookfield puts in up to $9 billion. Total $10 billion.
But each has a tag attached.
Brookfield's $9 billion is a non-binding agreement. Sounds complicated? In real estate terms, it's like saying "I'll buy this house" without even putting down a deposit. Legally, they can walk away at any time.
Nvidia's $1 billion is conditional. The condition is that Naver must separately secure $9 billion in confirmed funding first.
But where would that $9 billion come from? Brookfield. But Brookfield's money is still just words, right?
"If you bring $9B, I'll put in $1B." "I'm thinking of giving $9B, but it's not a promise yet."
These two sentences interlock to create the 14.6 trillion KRW headline.
Is this a scam? No. That's the second twist of today's post.
You have to look at the players. Nvidia needs no explanation, and Brookfield is a Canadian giant managing 1,500 trillion KRW. Last year, they teamed up with Nvidia and the Kuwait Sovereign Wealth Fund to create a 146 trillion KRW AI infrastructure fund. When these guys put their names on a number, it carries more weight than a drinking promise with Jhonberman.
Plus, the President of South Korea was there. At this point, it's harder to back out.
To summarize: Confirmed cash is 0 KRW, but it's a promise unlikely to be broken. That's the reality of last Friday.
3. Wait, why was this company's stock at the bottom?
This question should come up: If it's such a great company, why was it hitting a one-year low? Why is the "God-tier" stock at a new low?
Let's look at how Naver makes money. Think of Naver as a landlord of the best intersection in Korea.
Tens of millions of people visit every day to read news, find restaurants, or buy things. They earn money in two ways: rent for ad space and a commission when products are sold in the building.
But then ChatGPT, Gemini, and Claude appeared. They're in trouble.
Over half of the people in Korea have now used ChatGPT. Naver's search market share was in the 60% range for over 20 years, but now it's in the 40s. Some surveys even show Google has overtaken them.
What hurts more is which customers are leaving. People still go to Naver for weather and celebrity news. But for travel plans or loan comparisons, they go to AI. Which customer pays higher ad fees? The profitable customers are leaving first.
Plus, this year's stock market was a semiconductor one-man show. Money was sucked into Samsung and Hynix, and no one looked at internet stocks.
The building is aging, and customers aren't coming. There was a reason for the new low.
4. Lee Hae-jin is currently gutting the company
Here is the real plot of today's post.
Imagine you are Lee Hae-jin. Your home base—search—which you've built for 27 years, is being eaten by AI. If you stay still, you'll end up like Yahoo. If you can't protect the base, what do you do? You change the company's identity.
If you look at the events of the past year chronologically, the picture becomes clear.
Last November, they announced a 20 trillion KRW deal to bring Dunamu (operator of Upbit) in as a subsidiary. Dunamu is a cash machine earning over 1 trillion in operating profit a year. You know Upbit, right? The graveyard for Korean coin ants. Anyway, Naver as a whole earns a bit over 2 trillion, so bringing in that gem is a big deal.
In April this year, they removed the related search terms they used for 20 years. In June, they officially added an AI tab to the search bar. It's a declaration to overhaul the search screen. Now, when you search, AI results appear first.
In the same June, Jensen Huang himself visited the Seongnam office and announced they would build an AI factory together.
And last week, Lee Hae-jin flew to Brookfield's HQ in Canada and then to the US to drop the 14 trillion announcement. It's pretty cool, right?
What is this? They are taking down the search portal sign and changing their business to an AI infrastructure company. To use the landlord analogy, they've started building a power plant next to the shopping mall where customers are dwindling. And they're doing it with other people's money.
The direction is great. But as a shareholder, shouldn't you start using your calculator? Ultimately, how much money do they make? That's what matters.
5. This is where nine out of ten get fooled
There's a tiny clause in the Dunamu deal. This is the most important part of today's post.
When the deal is done, Naver's stake in Naver Financial—the company holding Dunamu—drops from 70% to 17%.
That's not a typo. 70 becomes 17. Because they are printing 15 trillion KRW worth of new shares for Dunamu shareholders, the original owner's share gets crushed. The top shareholder spot also goes to Dunamu Chairman Song Chi-hyung. Naver will just borrow the voting rights to continue management.
Now, memorize just one line today. Carve it into your brain: "NET PROFIT."
Operating profit belongs to the company; net profit belongs to the shareholders.
What does this mean? When announcing consolidated results, they add 100% of revenue and operating profit regardless of whether the stake is 17% or 70%. So next year, headlines like "Naver Operating Profit Surpasses 3 Trillion" will appear. It'll look flashy, and your heart will race.
But at the very end, when calculating net profit, they take back the portion that isn't theirs. The 1 trillion Dunamu earns is 100% in the news, but only 17% reaches the Naver shareholder's wallet.
Doesn't hit home? Let's look at what already happened. In Q1 this year, Naver's operating profit was 540 billion, but net profit was 290 billion. Only half the money remained. GPU costs for AI started coming in as expenses, taxes were taken, and the "other people's share" was removed. With Dunamu, this gap will widen.
So, when Naver news pops up, don't look at the big text; look at the small text underneath. Stock prices are calculated by net profit, not operating profit.
The 14 trillion news is the same. That money goes into the AI factory project, not the Naver shareholder's bank account. Only after the factory is finished, gets customers, makes a profit, and Naver's share of that profit is determined does it become money relevant to your stock. That's at the end of next year at the earliest.
6. What is the worst-case scenario?
Let's look at three potential breaking points.
One: The Dunamu deal falls through. This has already been delayed twice. What was supposed to end in June moved to late December. The Fair Trade Commission review isn't over, and there's talk in the National Assembly about limiting major shareholder stakes in crypto exchanges. If that becomes law, the deal has to be restructured from scratch.
Two: Brookfield doesn't sign. As I said, the $9 billion is just words. Until the non-binding agreement becomes a formal contract, nothing is confirmed. If this fails, the Nvidia money disappears too.
Three: The home base continues to collapse in the meantime. It takes a year and a half for the AI factory to make money. But search market share is dropping this very second. The point where the old business cools down before the new business ripens is where most companies pivoting their business model die.
7. Jhonberman, you jerk, so should I buy or not?
Think of Naver as an old building where a redevelopment plan was just announced.
The building is getting old, and customers are leaving. But the redevelopment blueprint is out, the contractor is Nvidia, a big hand is lined up to provide funds, and even the President clapped.
What happens when a redevelopment is announced? Everyone knows—the price jumps first. It's expectation. But the problem comes after. Does construction start? Are there massive additional fees? Does the union cause trouble? That's where it's decided. Understand?
So, don't look at the chart; just watch three dates.
- Q2 earnings at the end of this month. Look at net profit, not operating profit.
- The Dunamu shareholder meeting in November.
- The Dunamu deal closing date at the end of December. If it's delayed again, it's a warning, not just a delay.
There's no date for the Brookfield contract, so the moment news breaks, it's an event.
Finally, the conclusion. If I'm wrong, where would I be wrong?
I might be being too harsh on the "0 confirmed KRW." An announcement made in front of the President is effectively guaranteed by the state, so even a paper promise is hard to break. If the market reflects this as a certainty starting Monday, I'll be the only one left behind.
Conversely, if you jump in just looking at the headline and then get shaken by a single line of Brookfield news, that's equally dangerous. It can't be helped.
Betting on this big deal is up to you. Just set your stop-loss and stick to your betting logic. You know what I always emphasize, right?
P.S. It already jumped 10-15% from the new low.
Why is this a problem? Reports that Lee Hae-jin went to Brookfield HQ came out last Monday. This means some people already bought on the rumor. If you jump in after reading my post on Monday, you aren't picking it up at a new low; you're receiving it at an already increased price. Judge wisely. Buy on the news or sell? I don't know~
