Anna Jiwon Park has been covering the politics at The Korea Times since the summer of 2024, when she joined the press pool for the Office of the President in Korea. Prior to that, she spent about five years reporting extensively on financial markets, regulatory authorities and the financial industry. She joined The Korea Times in 2019 after spending eight years as a broadcast journalist at Arirang TV, Korea’s leading global broadcaster, covering politics, defense and culture.
What's behind plunge in Coupang's share price?
By Anna J. Park
Some analysts remain optimistic citing solid sales growth
By Anna J. Park
Korean e-commerce giant Coupang marks the first anniversary of its listing on the New York Stock Exchange this month, but the stock's recent performance has not given much reason for celebration.
Not only has the stock been declining after peaking at $69 when it went public on March 11 last year, it has lost more than 37 percent of its value this month alone. And last Thursday, the share price dropped by 16.56 percent, followed by another fall of 8.03 percent on Friday.
On top of other reasons such as the recent fall in IT shares and growing uncertainties, a key investor's block trade deal was attributed as the main cause of the stock's plunge last week. According to a filing with the U.S. Securities and Exchange Commission, SoftBank Group's Vision Fund sold over $1 billion worth of Coupang stocks ― 50 million shares ― at $20.87 a share to cause the plunge in the price late last week.
After making a flamboyant debut on the New York Stock Exchange in March of 2021, the stock suffered from overhang risks and strong selloff pressure, as major shareholders continued to cash in on their stakes. Last September, Vision Fund sold 57 million Coupang shares after its six-month lockup period was over. Despite the selloff, SoftBank Group is still the largest shareholder of the Korean e-commerce company.
Greenox Capital, which is Coupang's second-largest shareholder, has also been dumping Coupang shares. The firm sold 50 million shares in December and disposed of another 50 million shares on March 4, which caused a 17.16 percent plunge in the stock price on that day. In total, the investment company has sold 6 trillion won ($4.8 billion) worth of Coupang shares until now.
Following the fall, Coupang's market cap shrank to some $30 billion, which is more than a 64 percent drop from $109 billion logged on the first day of its listing a year ago.
Despite lingering overhang risks, some market analysts remain optimistic, because the company continues to log an impressive rate of growth. Coupang, which was founded in 2010, achieved a record-high annual revenue last year of $18.4 billion. The company's annual loss was $1.4 billion, which was also the highest so far, but was still at a manageable level, according to Coupang.
The firm also logged an annual growth rate of 54 percent last year, which is three times higher than local e-commerce companies' average growth rate of 15.4 percent.
“During the fourth quarter, Coupang's revenue stood at $5.08 billion with a net loss of $400 million. Given that the local e-commerce market logged a year-on-year growth of 15 percent during the fourth quarter, Coupang's quarterly growth is favorable with a net loss at a predictable level,” Kim Myoung-joo, an analyst at Korea Investment & Securities, said.
The analyst added that Coupang is expected to strengthen its advertisement and cross-border fulfillment business division in 2022, narrowing the size of its loss.