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Coupang Makes IPO Debut at $35 per Share Raising $4.2B

UTC by Steve Muchoki · 3 min read
Coupang Makes IPO Debut at $35 per Share Raising $4.2B
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Coupang shares are expected to start trading on Thursday on the New York Stock Exchange under their ticker ‘CPNG’. 

South Korean e-commerce giant Coupang Inc, which is backed by SoftBank Group Corp, conducted its initial public offering (IPO) on Wednesday. Notably, the company sold 120 million shares at $35 to raise $4.2 billion. Thereby putting its valuation at approximately $60 billion according to CNBC.

Reportedly, Coupang shares are expected to start trading on Thursday on the New York Stock Exchange under their ticker ‘CPNG’. Coupang IPO now makes the largest public offering this year in the United States stock market. Some of the lead underwriters include Goldman Sachs, Allen & Co, JPMorgan, and Citigroup.

Previously, the company had anticipated to sell its shares during the IPO at a price range of $27 and $30. However, due to heightened demand from investors, Coupang was compelled to raise the initial price.

Coupang and Its Perspetives after IPO

The e-commerce giant was formed back in 2010 by Bom Kim, a Korean-American billionaire. Coupang has significantly benefited from the coronavirus restrictions, whereby more people have shifted to online shopping. As a result, Coupang revenue has significantly spiked in the past few quarters.

Last year, the company’s net sales jumped 91% year-on-year to $11 billion. Besides, Net losses narrowed to $567.6 million from $770.2 million posted in the prior year.

Coupang has not only dominated the Korean market but also threatened to scale higher than Amazon.com Inc (NASDAQ: AMZN). A report by Goodwater indicates Coupang is doing far much better than Amazon in sales.

“Customers are coming back and spending at a rate that easily exceeds those platforms and closely matches the behavior on Amazon,” the report indicated. “But more surprising is that as early as 2017, Coupang’s performance already started to exceed Amazon, with year-three dollar retention of 346% with Amazon at 278%. Later cohorts have already improved on that. The value of these customers are not only best-in-class in Korea, but likely the highest in the world.”

Coupang has significantly invested in same-day delivery and also next-day delivery to have a better competitive edge. As a result, investors are optimistic the company will perform better in the coming quarters if the current conditions prevail.

However, Coupang and other e-commerce companies are expected to experience a decline in sales once the pandemic subsides. Investors and analysts are closely monitoring the coronavirus vaccine development in order to balance their portfolio accordingly.

Coupang has strengthened its logistics and technical infrastructure over the years in the Korean market, thus making it a challenging task for other e-commerce companies to compete. “a competitor would need to figure out a way to invest billions into logistical and technical infrastructure to try to compete with Coupang. Even with the necessary resourcing, you’ll notice that in South Korea, similar to other developed geographies, market leaders tend to build on their leads over time. We’ve seen this with Kakao, Naver, and now Coupang,” the report noted.

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Steve Muchoki

A financial analyst who sees positive income in both directions of the market (bulls & bears). Bitcoin is my crypto safe haven, free from government conspiracies. Mythology is my mystery! "You cannot enslave a mind that knows itself. That values itself. That understands itself."

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