Coupang's stock plunged as it posted a loss in the wake of the massive personal data leak at the end of last year. Investor sentiment is also weakening on expectations that profitability pressure will persist until it restores damaged customer trust and clears regulatory uncertainty.
Parent company Coupang Inc. closed at $17.89 on the New York Stock Exchange on the 6th (local time), down $2.87, or 13.82%, from the previous session. The share price, which had risen about 10% over the past month, gave up all its gains after the first-quarter results were released the previous day.
Based on the closing price that day, Coupang's market capitalization was $32.324 billion (about 47 trillion won). Considering that the market cap was about $37.6 billion (about 54 trillion won) based on the previous day's close of $20.82, about $5.3 billion (about 7 trillion won) evaporated in a single day.
Earlier, Coupang said the first-quarter revenue this year was $8.504 billion (about 12.4597 trillion won), up 8% from a year earlier. However, the quarterly revenue growth rate fell to single digits for the first time since its 2021 listing on the New York stock market.
Profitability worsened. Operating loss for the period was $242 million (about 354.5 billion won), swinging to a loss from a 233.7 billion won profit. Net loss was $266 million (about 389.7 billion won), also turning to a loss from a 165.6 billion won profit in the first quarter of last year.
After the large-scale personal information leak at the end of last year, a "Tal-pang" (leaving Coupang) trend emerged and the decline in customer numbers weighed on profitability. Coupang's number of active customers (customers who purchased at least once) in the first quarter was 23.9 million, down 700,000 from the fourth quarter of last year.
On top of that, expenses for issuing purchase vouchers (compensation coupons) and legal advice, plus investment in the new Taiwan business, widened the loss. In January, Coupang provided purchase vouchers worth 50,000 won per person to 33.7 million customers, spending about 1.6 trillion won in the process.
Bom Kim, chair of Coupang Inc., said on a conference call right after the earnings release, "The cost of purchase vouchers will have some impact through the second quarter," and "We have recovered about 80% of the Wow membership that declined after the personal information leak, but it may take time to fully restore the growth trend."
The securities industry is also worried in the near term about Coupang's profitability burden. Some said Coupang faced a "headwind" for the first time since its listing. Cho Sang-hoon, an analyst at Shinhan Investment & Securities, said, "The speed of restoring customer trust and the outcome of responses to regulation will be key variables for a share-price rebound."
With the possibility that the Personal Information Protection Commission may soon impose a penalty surcharge on Coupang in the trillions of won depending on the findings of its investigation, there is additional regulatory risk. The Korea Fair Trade Commission on the 29th of last month designated Kim as the same person (head of the group), which means Coupang is now subject to various regulations applied to large business groups.
Coupang immediately pushed back against the designation of the same person and has signaled an administrative lawsuit. Kim said the previous day, "We are aware of the recent designation matter in Korea and are reviewing it closely," adding, "As always, we are committed to complying with all regulatory requirements wherever we operate."