WEBTOON Entertainment Inc. (WBTN), the leading global entertainment company and home to some of the world's largest storytelling platforms, saw its stock price plummet 5.08% in pre-market trading on Wednesday. The drop came after the company reported its fourth quarter and full year 2024 financial results, which fell short of market expectations and provided a disappointing revenue guidance for the first quarter of 2025.

Despite posting a 10.4% year-over-year increase in revenue on a constant currency basis, WEBTOON Entertainment's reported revenue growth was only 5.6%, affected by the strength of the US dollar against foreign currencies. The company's net loss widened to $102.6 million in the quarter, primarily driven by higher general and administrative expenses due to public company costs, higher marketing expenses, and impairment losses on goodwill related to its web novel businesses.

The company's adjusted EBITDA for the fourth quarter was a meager $3.5 million, down significantly from $10.4 million in the same quarter of 2023. This disappointing performance was attributed to several factors, including actuarial losses on retiree benefits, currency translation effects, and lower gross profit in Korea due to a shift in revenue mix.

WEBTOON Entertainment's guidance for the first quarter of 2025 also raised concerns among investors. The company expects revenue growth of 1.7% to 4.8% on a constant currency basis, representing revenue in the range of $318 million to $328 million. The company cited delays in its IP adaptation projects in Korea, investments in infrastructure ahead of product improvements scheduled for the second half of 2025, and unfavorable foreign exchange rates as reasons for the sluggish growth outlook.

While WEBTOON Entertainment's management remains confident in the company's long-term strategy and growth potential, particularly in key markets like Japan, the disappointing results and guidance have raised concerns among investors about the company's ability to execute on its ambitious plans. The stock's plunge reflects the market's disappointment with the company's performance and outlook, underscoring the challenges it faces in an increasingly competitive global entertainment landscape.