Coupang, Tears of Seohak Gaemi Amid Insider Profit Realization Concerns

Concerns Over Insider Profit-Taking... Coupang Stock Falls Over 8% on the 17th
Large Investors May Sell Shares on the 23rd... Potential for Massive Stock Release into the Market

[Image source=Yonhap News]

[Asia Economy Reporter Gong Byung-sun] Coupang's stock price fell more than 8% overnight following news that a large volume of shares would be released. As predictions arose that insiders might prioritize profit realization, foreign investors who had heavily purchased Coupang shares are now worried about a stock price crash.

On the 17th (local time), Coupang's stock, listed on the New York Stock Exchange (NYSE), closed at $43.29 (approximately 48,600 KRW), down 8.15% ($3.84) from the previous day. On the 16th, it also fell 6.58% ($3.32) compared to the prior day.

The reason for Coupang's sharp decline is the expectation that a large volume of Coupang shares will be released into the market on the 18th. According to the listing report submitted by Coupang to the U.S. Securities and Exchange Commission (SEC), out of 65.7 million stock options granted to employees excluding executives, 34 million shares will be released from lock-up. This accounts for about 2% of the total shares outstanding (1.71514 billion shares).

Lock-up is a system that restricts shareholders holding shares immediately after a company's listing from trading for a certain period, protecting individual investors from stock price declines. Typically, the lock-up period lasts for six months after an initial public offering (IPO).

However, Coupang set an exception clause at the time of listing on the 11th, allowing insiders to realize profits even before six months have passed. Employees excluding executives can sell 34 million shares on the 6th trading day after listing if the stock price records above the offering price for three consecutive trading days after listing. Additionally, major investors excluding Chairman Kim Beom-seok and affiliates can dispose of some shares if the stock price exceeds 33% above the offering price ($35) to $46.55 or more after 12 days from listing.

As a result, concerns among foreign investors who heavily purchased Coupang shares have grown. According to the Korea Securities Depository, domestic investors net purchased about $68.75 million worth of Coupang shares within five days after the listing. This ranks fourth among all U.S. stocks.

Meanwhile, suspicions have also been raised that Coupang deliberately set a low offering price to enable insiders to realize profits. On the 16th (local time), U.S. economic media Bloomberg stated, "Considering Coupang's soaring stock price, the offering price of $35 is too low," and suggested, "The offering price may have been lowered to allow some investors to realize profits."

Bloomberg cited the closed pre-investor decision process as a key circumstance. According to Bloomberg, Coupang allocated about 80% of shares to 25 investors in advance. Bloomberg claims this is a rare decision for a company conducting an IPO. Furthermore, Bloomberg added that Coupang did not disclose the identities of these 25 investors.

This content was produced with the assistance of AI translation services.