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| Coupang's warehouse in Incheon is seen in this 2019 file photo. / Courtesy of Coupang |
By Kim Jae-heun
Coupang, the country's leading e-commerce operator, is said to have plans to acquire major stakes in eBay Korea as it is seeking to grow its entire corporate volume before a possible initial public offering (IPO) on the Nasdaq, according to sources, Monday.
A report released by Hana Daetoo Securities, a local brokerage, said Coupang's biggest stakeholder may acquire controlling stakes in eBay Korea, which was up for sale, to receive more funding from investors at the time of the South Korean e-commerce firm's IPO on the tech-heavy Nasdaq, possibly next year.
"Coupang is aiming for the Nasdaq listing next year. As a necessary step in terms of expanding its market share, Coupang is expected to grow its corporate size by acquiring major stakes in eBay Korea," Hana Daetoo Securities analyst Park Jong-dae wrote in a note to clients.
Coupang, which has so far secured $3 billion in investment from SoftBank and its Vision Fund, has seen daily deliveries climb to 3 million in mid-February from some 2.2 million per day late last year.
The outbreak of the coronavirus is helping a lot for Coupang in terms of orders. However, the orders are mostly for low-margin goods such as cheap household items and fresh produce, which some analysts were questioning in terms of long-term profitability.
As institutional investors are typically weighing in on concrete plans for corporate sustainability and profit visibility, Coupang's not-that-impressive financial sheets would be considered a "double-edged sword" if it goes up for an IPO in the United States. At the time of the Vision Fund's investment decision back in late 2018, Coupang was valued at about $9 billion.
But regulatory filings said it reported 1.1 trillion won operating losses as of 2018, although revenue soared 65 percent to 4.4 trillion won. That means it sells a lot; however, its main products weren't pricey. Over the last five years, Coupang reported a total of some 3 trillion won in operating losses. From a visibility standpoint, Coupang was looking competitive as its total transaction volumes as of 2018 were about 12 trillion won, helping it to become the country's largest e-commerce operator.
SK Securities, another local brokerage, recently said if Coupang is listed on the U.S. stock market, it will be subject to a conservative valuation standard for deficit unicorn companies as evidenced by the failed listing of office-sharing startup, "WeWork."
In an attempt to defy concerns surrounding its future profit roadmaps, Coupang appointed a former Federal Reserve Governor, Kevin Warsh and a former Chief Financial Officer at International Gaming Technology Alberto Fornaro, in moves widely seen by many as laying groundwork for an upcoming IPO.
"First of all, Coupang is practically an American company and Kim Bom is also an American. Nearly 40 percent of the previous executives were American nationals, so we count its scouting of Kevin Warsh and Alberto Fornaro as well as other big names a major reason for its preparation to go public … Though, it could be for another reason," said an industry source who spoke under the condition of anonymity.
"More importantly, things have changed there after WeWork has failed to make its debut on the Nasdaq. The trend shows investors preferring business with better investment outcome. It is said that Coupang is valued at 10 trillion won in the market, but it needs to be at least 15 trillion to go public smoothly, because investors want return on their investments. I think it will be listed one day but the situation doesn't look bright at the moment," the source said.
