Everything you need to know about the Coupang IPO

What is Coupang?

Coupang is a South Korean e-commerce company, founded in 2010 by Bom Kim. The company was initially a discount site, similar to Groupon, but eventually focused on e-commerce. It’s now the largest e-commerce company in Korea and is on track to become the third-largest e-commerce market in the world.

Coupang has approximately 15 million active customers, and at least 200,000 third-party sellers signed up to sell on the platform.

Coupang is a completely digital company – with only web and mobile platforms. It’s worth noting that the Korean market is extremely receptive to e-commerce. It’s not only one of the most densely-populated countries in the world, but it also has the highest uptake in mobile and internet use. More than 80% of Koreans live in cities and 95% of the population own a smartphone.

Coupang IPO: How much did the South Korean Amazon raise?

Coupang’s IPO took place on March 11 on the New York Stock Exchange under the symbol CPNG. It raised $4.6 billion, exceeding the expectations it set of $3.6 billion.

It was the largest IPO in the US to date in 2021, and one of the top 25 of all time by deal size. Coupang is also one of the top five largest Asian companies on the US exchange by market capitalisation.

Find out more about potential upcoming IPOs in 2021.

How much is Coupang worth?

Coupang had a closing share price of $49.25 on its first day of trading, which gave it a total worth of $84.5 billion. Coupang had priced its shares at $35 each, but upon open the stock surged a massive 40% to $63.50, giving the company a market cap of $102.2 billion.

Expectations of Coupang’s worth before the IPO were between $46 and $51 billion – and even that was a considerable increase from the $9 billion valuation from its last funding round in 2018. The IPO is predicted to be the largest since Alibaba went public in 2015 for $25 billion.

The company and some of its existing shareholders will be offering approximately 120 million shares during the IPO. After the listing, Coupang will still have a total of 1.7 billion shares outstanding, including Class A and Class B, which will contribute to its final valuation.

How does Coupang make money?

Coupang makes money through the sale and delivery of a range of products – including electronics, homeware, children’s toys and games, books and baby goods. Like Amazon, Coupang has a membership system – the equivalent of Amazon Prime – called Coupang Wow Rocket Membership.

More recently, the firm has also launched its own private-label product lines for clothing, beauty products and electronics, as well as breaking into the grocery market. Coupang now claims to be the largest online grocer in Korea. In 2020, Coupang also launched its own video streaming service called Coupang Play and rolled out a Coupang Logistics network in January 2021 that would bring its warehouse demands in-house.

Coupang has also expanded into other areas. For example, creating its own advertising group, called Coupang Media Group, a fintech space called Coupang Pay, and a food delivery service called Coupang Eats.

Is Coupang profitable?

In short, no – Coupang is not profitable. The company is extremely young when compared to other e-commerce platforms on the market and hasn’t yet turned any profit. In 2020, it lost close to half a billion dollars. In 2019, their operating loss was over $590 million, down 50% from the previous year.

However, this story isn’t unique to Coupang.  A lot of Korean start-ups are unprofitable for years, prioritising growth over profits. Therefore, most of Coupang’s cash has come from external investment – raising $300 million in 2014 from US investors, followed by $3 billion from SoftBank in 2015 and 2018. This funding gave Coupang the capital needed to become a 50,000-strong workforce in just 11 years.

Coupang has spent a considerable amount on marketing and advertisements to reach its 25% market share in Korea’s online retail market. It seems the company feels it now has enough market dominance to list on the stock market, which will be another step toward growing the company’s cash flows and eventually breaking even.

What is Coupang strategy?

Coupang’s strategy is based around being the most efficient e-commerce platform available, and completely transforming the end-to-end customer experience. According to Coupang, 99.3% of its orders are delivered within 24 hours of purchase.

All of their returns are completely automated too, the consumer just has to leave their item outside – in their reusable Coupang delivery container – and notify Coupang that it needs collecting via its app.

Coupang currently only serves the Korean market, where has nearly 52 million users. Its warehouses are so widespread throughout the country that the company claims 70% of all Koreans live within just seven miles of a fulfilment centre – of which there are over 100.

The move to IPO on the NYSE came as the firm needed more capital for ventures into technologies such as AI and robotics to make their process even more efficient.

Who are Coupang’s competitors?

The most natural assumption is that Coupang’s largest competitor is Amazon – both are e-commerce giants – however as Coupang isn’t active outside of Korea, and Amazon isn’t active in Korea, they haven’t drawn on the same consumer pool.

While Coupang is the dominant e-commerce company in Korea, with approximately 24.6% of the e-commerce market as of April 2020, the company is nowhere near the same market dominance as Amazon. Coupang noted that its ‘total net revenue remains a very small percentage of the total retail, grocery, consumer foodservice, and travel spend in the Korean market.’

Now that Coupang has decided to expand into other markets, such as advertising, fintech and food delivery, it will have a lot of other companies to compete with – such as Google and PayPal. But as yet, there are no plans for it to reach outside of its Korean market, which will lessen the rivalries.

Who owns Coupang?

Coupang is still owned by its founder, Bom Kim, who will retain 76.7% of voting power after the listing. SoftBank Vision Fund will own 36.8% of Coupang Class A shares after the company’s IPO, giving it 8.6% of voting power.

Other large investment stakes include Greenoaks Capital Partners, Maverick Holdings, Rose Park Advisors, BlackRock and Ridd investments. 

Who are the directors of Coupang?

How to trade Coupang shares

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