Shares of South Korea’s Kakao Games are climbing steeply on the back of the strong performance of its new massively multiplayer online role-playing game (MMORPG) “Dokkaebi’s World.” As of 10:13 a.m. on Oct. 23, Kakao Games was trading at 11,730 won (approximately $8.9), up 7.81% (850 won, approximately $0.64) from the previous session. That marks a 13.66% gain from a week earlier and a 29.01% rise from a month ago.

The rally traces back to “Dokkaebi’s World,” released on Oct. 8. Developed by Supercat and serviced by Kakao Games, the game reached the top of Google Play’s revenue rankings within five days of launch and has held the No. 1 spot through Oct. 23. With the new title settling into the upper ranks of revenue charts, market attention has naturally shifted to the possibility of an earnings rebound.

Kakao Games had struggled to find a clear growth engine. “Odin: Valhalla Rising,” released in 2021, has effectively propped up its results, but with revenue from existing games declining and a prolonged drought of new titles, the company has posted losses since the fourth quarter of 2024. It recorded an operating loss of 23 billion won (approximately $17.4 million) in the second quarter of this year, while revenue fell 35.2% on-year to 75 billion won (approximately $56.7 million). Odin, once a cash cow, has slipped to 16th place on Google Play’s revenue chart.

Brokerage houses are quickly changing their tune. On Oct. 22, Mirae Asset Securities upgraded its investment opinion on Kakao Games to Buy from Neutral and raised its target price to 15,000 won (approximately $11) from 9,000 won (approximately $6.8). Lim Hee-seok, an analyst at Mirae Asset Securities, said the company is expected to swing to an operating profit of 145 billion won (approximately $109.6 million) next year from an operating loss of 100 billion won (approximately $75.6 million) this year, adding that “an expanded pipeline of new titles is the main driver of earnings improvement.”

The same brokerage projected next year’s revenue at 833 billion won (approximately $629.9 million), up 114.8% from this year. It raised its operating profit forecast 154% to 145 billion won from the previous 57 billion won (approximately $43.1 million). “Odin Q,” slated for release in the first quarter of next year, was cited as the foremost factor underpinning the earnings outlook. “With the early success of ‘Dokkaebi’s World,’ released on Oct. 8, confirmed, Odin Q will be launched in the first quarter of next year,” Lim said. “Chrono Odyssey and ArcheAge S are also scheduled for release next year, easing concerns over the chronic delays in new title launches.”

An improved cost structure was also cited as a pillar of the earnings recovery. Kakao Games is reorganizing its business around games by winding down non-core operations and streamlining its organization. “The burden of personnel and fixed costs is being gradually reduced,” Lim said. “The labor-cost ratio to revenue, which soared to around 43% this year, is expected to fall to around 23% next year.”

Hyundai Motor Securities also raised its target price to 13,000 won (approximately $9.8) from 11,000 won (approximately $8.3). Choi Seung-ho, an analyst at Hyundai Motor Securities, said the declining popularity of Chinese strategy games (SLGs) and the growing share of MMORPGs in South Korea’s mobile game market are positive for Kakao Games.

Its investments in the casual game segment were also viewed favorably. AI-based ad targeting and automated ad creative production are lowering user acquisition costs and improving the revenue efficiency of advertising spending, according to the analysis. Kakao Games plans to diversify its business mix, currently skewed toward MMORPGs, and secure new profit sources through the acquisition of Me2on. “Investment points are the new-title and earnings momentum from the Odin Q launch, profit expansion from structural improvements, and business diversification through the acquisition of a casual game company,” Lim said. “Expectations for an earnings rebound next year are set to build, which should lead to a revaluation of the company.”