Written by Arasu Kannagi Basil and Joyce Lee
(Reuters) – Shares of online comics platform Webtoon Entertainment surged as much as 14.3% above their initial public offering price in their Nasdaq debut on Thursday.
The stock opened at $21.30, giving the company a valuation of $2.71 billion, and traded as high as $24. It last traded at $22.86 just after midday.
The company, backed by South Korean tech giant Naver, raised $315 million by selling 15 million shares in an initial public offering at the top end of its $18-$21 marketing range.
The strong debut bodes well for companies looking to go public as the summer IPO market gears up for new issuers.
Webtoon, based in Los Angeles, California, is a storytelling platform that hosts thousands of stories spanning over 20 genres, including fantasy, romance, comedy, and horror.
The company was founded in 2005 as a side project of CEO Junkoo Kim, who was then a search engineer at Naver.
Webtoon sold about 2.4 million shares to Naver at the initial public offering price in a concurrent private placement for proceeds of about $50 million.
Webtoons are short comics created digitally and optimized for mobile reading. The format, which began in Korea two decades ago, is cheap to produce and can be created by anyone with a tablet.
This form, which draws on a rich history of visual storytelling in Korea, has gained global popularity following the success of K-pop, K-drama, and other Korean cultural exports.
Some popular webcomics include Lore Olympus – a romantic retelling of the Greek myth of Persephone – and The Sound of Your Heart, a semi-autobiographical story.
The company was already benefiting from operating cash flow terms in 2023 and plans to use the IPO funds to accelerate growth in North America so that the webtoon will have a niche there similar to South Korea or Japan in terms of user base and ad revenue, Kim and Chief Strategy Officer Youngsoo said. Kim told reporters.
“The platform business accounts for about 80% of our sales, advertising 10%, and intellectual property business 10%. In all three areas, we have a lot of room for growth,” Youngsoo Kim said, referring to the fees people pay to read works. Revenue generated from converting webcomics or web novels into different formats, such as drama or film.
Webtoon will also invest in technology like artificial intelligence to ease the workload of content creators and increase the diversity of the works it hosts.
With 24 million creators producing 55 million episodes on its platform over the past decade, dozens of online anime have been adapted into popular dramas and movies like Hellbound, Bloodhounds, and Sweet Home on streaming services including Netflix (NASDAQ:), Amazon (NASDAQ:) Prime Video, and Apple (NASDAQ:) TV.
“We have an evergreen source of content,” Youngsoo Kim said. “Given the creator base, the next Harry Potter, the next Pikachu… it has to come from here.”