"Coupang Faces First Setback Since IPO... Swings to Loss on Data Leak and Investment Expansion" [Click eStock]

"Restoring Customer Trust Is Key": Stock Price Volatility Emerges
"Growth Story Remains Intact": Short-Term Cost Burden Increases

According to analysts in the securities industry, Coupang has faced its first major setback since going public, with profitability plunging due to costs related to responding to a personal information leak and investments in its new business in Taiwan.

On May 7, Shinhan Investment Corp. reported that, the previous day, research analyst Cho Sanghoon stated, "While Coupang's logistics competitiveness and medium- to long-term growth story remain intact, short-term factors are weighing on overall earnings. Investors will need patience until these negative issues are resolved." He maintained a target price of $28.20 per share.

Regarding Coupang's first-quarter results this year, analyst Cho explained, "For the first time since its IPO, quarterly revenue growth slowed to single digits, and operating profit turned negative." He attributed this to the combined impact of large-scale expenses incurred in addressing the personal information leak in the fourth quarter of last year and increased investment in the new business in Taiwan.

In the first quarter, Coupang recorded revenue of $8.5 billion (an 8% increase year-on-year) and an operating loss of $240 million, significantly missing market expectations. Both the cost of goods sold ratio and SG&A expense ratio increased, and it is assessed that approximately $1.2 billion in compensation costs for purchase credits related to the personal information leak negatively impacted performance.

By business segment, the core retail and commerce division generated $7.2 billion in revenue, up just 4% from the same period last year. Analyst Cho pointed out, "Growth in both the number of active customers and average order value slowed," and analyzed, "The personal information leak undermined customer trust and led to a decrease in new customer acquisition, weakening the growth momentum of the core business."

The new business segment recorded $1.3 billion in revenue, representing 28% year-on-year growth. However, operating losses widened to $330 million, mainly due to proactive investments in the Taiwan market. Consequently, quarterly free cash flow also turned negative at $110 million.

Analyst Cho commented, "Profitability has plunged as one-off expenses and structural investment costs overlapped." He added, "While the $390 million share buyback is a positive, the speed of customer trust recovery and the outcome of regulatory responses will ultimately be the key variables for a short-term stock price rebound."

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