So these lawsuits, at least in my opinion (*I AM NOT A LAWYER NOR AM I ANYONE WHO HAS ANY EXPERIENCE PLACING WALL STREET BETS, TAKE WHAT I HAVE TO SAY WITH MOUNTAINS OF SALT) is less about Webtoons 'lying' to shareholders and more so about them kicking the debt down the road which these lawyers want to try and hold them accountable for. It's not uncommon for startups to seek out private and/or public funding to help them stay out of bankruptcy, but such practice is incredibly shitty because if a company was already near the point of bankruptcy to begin with, what exactly is going to change to ensure that they actually make that money back with an additional net gain for those investors?
So in that sense, either something will come of this, or it won't, nothing's really a guarantee as of now. It's just as common for startups seeking public investments to get sued within their first 1-2 years because a company not returning on their initial investments within 3-6 months is a prime cut for lawyers to drool over. Despite their attempts to be honest about their earnings, the vast majority of Wall Street investors are paranoid little fuckers who invest in whatever's new and exciting with the hopes that it'll turn them a profit quickly and without headache. Unfortunately, Webtoons isn't a company that's known for having huge profit margins, which these investors would have realized if they knew anything about this industry or at the very least, bothered to read the fine print that Webtoons was obligated to lay out for them in their documentation. At best the majority of them saw Webtoons' offering that covered buzzwords like "content generation" and "AI" and went "yes please, I love money!" without realizing that webtoons, as a medium, have some of the highest production expenses to lowest-paying demographics out there and therefore companies like Webtoons aren't going to be a short-term gratification. It's more like waiting it out for the "next big thing" that will make that stock valuable again, a massive gamble that isn't guaranteed to payoff. And that's just the game of Wall Street in general.
That said, it's because of how difficult it is to directly monetize digital comics that Webtoons often has to rely on selling merchandise and IP rights in the hopes they'll land a whale - but even their pre-existing whales like Lore Olympus and Let's Play have either nothing to show for themselves, or have left the platform entirely. Of course, they'll vaguely claim that two of Netflix's highest-performing projects came from their platform, but any peek at an aggregated Top 10 list will prove that that is simply not true, and at best, they're referring to True Beauty's live action adaption, which is simply not even close to breaching that list of all-time top-performers (except probably in Korea but this is Goldman Sachs and their American investors they're trying to convince), All of Us are Dead (see above, same situation as True Beauty), and Heartstopper which is... not even an Originals series. Of course, that didn't stop Webtoons and Tapas from boasting about Heartstopper's Netflix adaption and its success on the platform, but literally none of its success is exclusively owed to either of those platforms, Alice Oseman flies solo and if anything, Heartstopper never would have gotten to the point it's at if it were tied down to a Webtoon Originals contract.
So in a sense, until anything comes of these lawsuits, they're more so just lawyers jumping on their own investment opportunity - the opportunity to get settlements from Webtoons for both their clients and themselves by extension. At best what they feasibly have against Webtoons is the company getting way too high on their own supply without anything to feasibly show in terms of profit for their IP's. Considering how many IP's they sold to television and film production studios back in 2019-2022 when they were at their peak over the lockdowns - a peak that is long in the rearview mirror - they are incredibly behind in actually paying off those promises. Even in a recent meeting they held just the other day with Goldman Sachs, they're quoted as saying: "When Rachel Smythe was a graphic designer in New Zealand, 4 or 5 years ago, and she had a story to tell, we enabled her to not just tell it in one part of the world, but globally. She became a NYT Bestselling author, she is rumored to be releasing soon as a major animated release."
When even the company that hosts Lore Olympus as its prize pig can only say that its long-anticipated TV production that both Rachel and Webtoons have been assuring people on repeat that the show is "still happening" and that what they've seen so far "looks amazing" is simply 'rumored to be releasing soon'... I don't even have the words to describe how embarrassing that is for them. Never mind the fact that Lore Olympus has been over for months and both it and its creator, Rachel, have been falling into the pits of irrelevancy. They don't have any other home-runners to bet on, they're just continuing to bank on Rachel as their own example of someone who "got big" even though it was years ago and that fame is now shrinking with the passage of time, you can even see the performance of the series dipping in its own front-end metrics over time. They are trying so hard to convince people that they're worth investing in when the one thing that actually DID have that kind of allure has now come and gone.
Never mind the fact that again, most Wall Street investors probably don't even participate in webtoon culture so the name "Rachel Smythe" isn't some golden ticket to fortune. Lore Olympus might get a bit more of a reaction, but it's going to be a lot more mixed due to how divisive the series became in the end, and general audiences who are new to Webtoons as a public company (and the medium as a whole) are still not so likely to know what the fuck that means or why it's significant. The best time to pull the "we have Rachel Smythe!" card in the public investing pool was, like many other things Webtoons has fallen behind in, years ago. Now it's clear Webtoons thinks that Rachel is their own personal J.K. Rowling, but they forgot the part where Rachel is creating for an incredibly niche and historically unprofitable medium that is nowhere near as big as what Harry Potter was back in its prime, and - personally speaking - that Rowling and Rachel are both, well... terrible at what they do.
Webtoons also has the added burden of not being a startup company. They're not some grassroots Silicon Valley tech startup run by a bunch of friends "with a dream", they're an extension of an industry that thrives overseas but barely has any infrastructure to support it here. They've been bankrolled for years by an overseeing tech company - Naver - but have consistently failed to get out of the red and so of course, now they're turning to public investments to help them out and subsequently, are passing that debt off to the next highest bidder, which is Wall Street. They had nearly a decade to figure their shit out here in the West and while they had their opportunities to thrive, those opportunities have come and gone, a lot of doors have closed and now this all feels like their own attempts to rip those doors back open again.
There is a LOT to insinuate already that Webtoons - a Korean-hosted platform - wasn't ready to enter the Western market and this fumbling of their public stock image is yet another great example of that. Even outside of Webtoons, other Korean-run platforms like Tapas have relied on private investments to keep them afloat (and still do, Tapas is still operating privately) and have routinely struggled to get a real foothold in the greater Western industry despite how much they hyped themselves up as the "next big thing". They're all playing the same game over and over again expecting better scores even though the playing fields are entirely different than what they've come to expect in Korea, where much of the entertainment industry is built around webtoons, much like how our entertainment industry in the West is built around comic giants like Marvel and DC (and even those giants are faltering as we've been seeing over the past several years).
Anyways. I don't know if this lawsuit is gonna go anywhere, there's a lot to the legal process that could lead to a variety of different outcomes, but at the very least, their plummeting stock value and the lawyers circling them from above is yet another notch on their belt of fuck-ups over the past few years. I know it's easy to say this in hindsight and I'm not the kind of guy to say "I told you so", but considering I've been following along with the bullshit of these major platforms for years and knew as soon as Webtoons was rumored to be going forward with an IPO that it would lead to disaster, I'm pretty confident in saying, "No really, I told you so." And I don't entirely blame the investors for that (except for the ones that clearly didn't read the fine print) - I also blame Webtoons for that, because they are a chronically unprofitable company run by a bunch of clowns who manufactured their own demise by getting in WAY over their heads and clearly don't even have a concept of a plan let alone an actionable one.
And that sucks, because the people who stand to get hurt the most are the ones who were made those empty promises years ago, long before the platform entered Wall Street - and that's the creators who were promised that their livelihoods would be secured and their work would be protected.
I will forever bully and make fun of Webtoons for everything they've done in and to this industry. I hope at the very least those investors learned an expensive lesson, and that the damage these lawsuits have already caused to Webtoons' public image - regardless of whether or not these lawsuits win - empowers others who have been screwed over by them to speak up and make their moves. They are not a monolith. They are a brittle business operating from the trunk of a clown car on their way to becoming a penny-stocks sham.
