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IPOs

Coupang gets the green light for Nasdaq listing

By Jan 11, 2021 (Gmt+09:00)


Coupang offers early morning delivery for fresh produce.
Coupang offers early morning delivery for fresh produce.

South Korea’s e-commerce giant Coupang Corp. has received the green light for its Nasdaq listing, increasing the possibility of a trading debut as early as the first half of this year.

The company's deficit in the hundreds of millions of dollars had been considered a roadblock for the listing, but Coupang is now ready to proceed with public marketing activities for its IPO, indicating that the US Securities and Exchange Commission has finished reviewing the company's paperwork, according to investment banking sources on Jan. 11.

Rumors of the Korean e-commerce giant going public on the Nasdaq have circulated since the end of 2019. In January 2020, Bloomberg reported that Coupang had begun working on tax structuring in preparation for an IPO, followed by reports that it will be the first company to list on the Nasdaq in the second quarter of this year from a pool of companies that SoftBank Group has invested in.

SoftBank Vision Fund, run by SoftBank Group’s Chief Executive Masayoshi Son, holds a 37% stake in Coupang. 

Coupang is rushing for the listing in the first half as its enterprise value has swelled, owing to improved earnings in 2020. Last year, the company's valuation stood around $13 billion during an overseas roadshow for investors. Since then, it has more than doubled to touch $30 billion as of early this year, driven by a wave of online orders owing to the COVID-19 pandemic.

In the first half of 2020, Coupang reported 9.9 trillion won ($9 billion) in the volume of online payments, up 41% from the 7.2 trillion won in the first half of 2019.


Coupang's online orders surged due to the COVID-19 pandemic.
Coupang's online orders surged due to the COVID-19 pandemic.


Securities firms project Coupang’s 2020 revenue to reach around 11 trillion won ($10 billion), up 55% from the previous year, with its operating loss narrowing to 200 billion won, one-third of the 720 billion won operating loss posted in 2019. The company's accumulated losses since 2014 reached some 3.72 trillion won as of last year.

Analysts say the company may mark a turnaround this year with an estimated revenue of 15 trillion won and an operating profit of 300 billion won.

“Coupang’s bargaining power has increased in line with its growing market share,” said Park Eun-kyung, an analyst at Samsung Securities. “The company is becoming more profitable due to its improved cost of goods sold and cost-to-income ratios," Park said, adding that swinging to operating profit this year is plausible, if excluding its new business ventures such as over-the-top services.

However, it remains uncertain if Coupang's assumed enterprise value of $30 billion will be upheld. The company has internally projected its enterprise value up to $40 billion by applying a price-to-sales ratio of four times based on last year’s predicted revenue of 11 trillion won. The P/S ratio is frequently used to determine the enterprise value of e-commerce companies.

Gross merchandise value is also often used to measure the value of e-commerce companies, in which case, Coupang's enterprise value could touch 20 trillion won considering that its annual transaction amount is estimated to exceed 17 trillion won.

SoftBank is expected to pocket impressive returns if Coupang makes a successful debut on the Nasdaq, given that the company’s valuation stood at $5 billion when SoftBank CEO Son made the initial $1 billion investment in 2015, followed by a $2 billion investment in late 2018, valuing the company at around $9 billion.

Write to Ye-jin Jun at ace@hankyung.com

Danbee Lee edited this article.

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