Coupang's Nasdaq listing next year 'unlikely'
Coupang deliverymen pose for the picture before sending parcels from the distribution center in Seoul in this 2019 file photo. / Courtesy of Coupang
By Kim Jae-heun
Rumors circulated that the country's leading e-commerce operator Coupang will go public on the Nasdaq next year to raise funds as its accumulated deficit reached nearly 3 trillion won. Bloomberg also reported in January, citing an anonymous insider, that the e-commerce company has already begun revising its tax structure to prepare for its initial public offering (IPO). However, with the recent volatility of the American stock market, insiders here have doubts about Coupang's listing.
“To be honest, I am not sure whether Coupang will go public or not. But one thing for sure is that the situation got worse compared to one or two years ago,” said a source in the online retailing company who asked to be cited anonymously. “The U.S. stock markets have plunged and if this trend goes on for a longer period of time, the public offering will not take place.”
“Investors that invested in listed companies both on the Nasdaq and the Dow have become cynical about bulked-up firms that do not have a good profit model. It is totally up to Coupang on how well they can persuade investors by stressing its strength in the market and new business that can make profits,” the industry source added.
Coupang's value was estimated at nearly $9 billion in 2018 according to Bloomberg and the company neither admitted nor denied rumors that it will go public soon. The online retailer said it will plan an IPO at the right time and right place but it doesn't know when and where.
However, many insiders are pessimistic about its enterprise value, as it has not recorded profits in seven years.
The 2014 audit report showed Coupang's revenue was 348.4 billion won with a 121.5 billion won operating loss. Four years later, its sales increased by 10 times to a record 4.42 trillion won but its business losses also increased to 1.97 trillion won.
The company explained that they paid a lot for labor costs related to deliveries and expansion of distribution centers across the country.
This has led Coupang to record an over 1 trillion won deficit in 2018 and another 1 trillion last year.
Chairman Masayoshi Son of SoftBank was a savior for Coupang two times when Son invested $1 billion in 2016 and $2 billion in 2018. However, the chairman cannot keep pouring cash into Coupang every time it runs out of money.
Other start-ups that Son invested in, such as Uber and WeWork, are not showing expected performances either.
Uber managed to go public but its stock price fell afterwards and WeWork failed to list. What seemed like big deals in the IPO scene have turned out to be bubbles. Investors are also keeping a suspicious eye on Coupang's potential in the market.
To make the situation worse, Coupang is failing to dominate the online retailing market despite massive investment put into the firm. It is closely competing against Naver for the top position in the market share and the country's No.1 search engine platform announced that it will aggressively invest in its online shopping business.