Coupang challenges the US stock market… ‘Planned deficit’ finally shine

Challenge to be listed on the New York Stock Exchange… Complete next month as soon as possible
Accumulated deficit reaches 4 trillion won, but investment continues after financing

(Sisa Today, Sisa ON, Sisa On = Reporter Ahn Ji-ye)

Coupang has formulated a long-standing challenge to go directly to the New York Stock Exchange. Coupang has been steadily steadily calling out its appearance under the stance of’planned deficit’, and its ransom has risen vertically to about 55 trillion won. Even after listing, Coupang plans to continue its investment drive with a deficit.

On the 12th (local time), Coupang submitted a declaration form S-1 to the US Securities and Exchange Commission (SEC) for listing of Class A common stock (hereinafter referred to as’common stock’). The number of common stocks to be listed and the range of offering prices have not been determined. Coupang plans to list its common stock on the New York Stock Exchange (NYSE) under the’CPNG’ trade symbol. Related industries are predicting that the listing will be completed as early as next month.

This listing is the result of the will of Coupang founder Kim Bum-seok and Chairman of the Board of Directors about 10 years ago. Chairman Kim said in August 2011, the 1st anniversary of Coupang’s founding, “I will leap to the world by listing on NASDAQ within 2 years.”

Instead, Coupang goes through the process of listing NYSE, the world’s largest stock exchange, not the NASDAQ it was initially pursuing. Industry analysis is that it is a paving stone to secure more stable investment funds. In addition, it is evaluated that the company showed confidence in performance improvement, such as a sharp increase in sales and a reduction in the deficit in the recent aftermath of Corona 19.

If Coupang succeeds in listing directly in New York, it will be the first case for a domestic company. This seems to have been the basis for aggressive investments that suffered large operating losses.

In the past, when the social commerce and e-commerce markets were just beginning to grow, the industry was skeptical about Coupang’s planned deficit. Coupang’s deficit was so large that it could not be compared with its competitors, and voices expressed doubts about whether it could survive the survival competition as the number of competitors increased. In that case, Coupang maintained its position as an investment for growth.

In fact, it is known that the cumulative deficit of Coupang soared to 4 trillion won. It has increased every year to 5652 billion won in 2016, 6228 billion won in 2017, and 1.138.3 billion won in 2018. Competitors maintained a similar stance, but in recent years there have also emerged companies turning to solidify their strength after bleeding competition. But Coupang didn’t care. Even at the expense of operating losses, it continued to invest in logistics infrastructure, delivery personnel, and new businesses.

The dominant view is that this is a management strategy implemented under the judgment that it is highly likely that the company surviving as the last winner due to the nature of the e-commerce market will dominate the market. In fact, Amazon is said to have a 47% market share in the US, which is said to have a large share gap with eBay (4.7%), the second place. Coupang has professed to stand for the’Korean version of Amazon’.

In addition, there are speculation that the industry is getting closer to the structure of profit realization as the deficit began to decrease from last year. Coupang’s deficit fell to 748.8 billion won for the first time in 2019, and is estimated to have decreased to 525.7 billion won last year. The sales are reported to have nearly doubled from KRW 7.1 trillion last year to about 1.3 trillion won last year. However, it is pointed out that it is difficult to determine whether or not sustainable growth is possible as the cumulative deficit is still large despite the reduced losses.

Coupang plans to continue aggressive investments with funds raised by listing on the US stock market. In particular, the expansion of logistics centers and full-filment is expected to be the main sources of funds. New businesses are also expected to expand, including food delivery service Coupang Itz and recently launched OTT service Coupang Play.

Park Jong-dae, a researcher at Hana Financial Investment, said, “Last year, Coupang has a greater possibility of operating surplus by 2022 as its operating cash flow turned to positive for the first time despite the spread of Corona 19 (a novel coronavirus infection).” It was analyzed that by raising US$1 billion, we have been able to solve the cumulative deficit and total capital encroachment and secure the capacity to invest.”

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