Has the Worst Passed? Coupang’s Share Price Is Recovering

Coupang Inc.’s share price has been recovering in recent days. Analysts say the company, which was hit hard by a personal data leak scandal, has pulled out of a slump in earnings and entered a full-fledged rebound phase.

According to Investing.com and other sources, Coupang Inc.’s shares closed at 20.80 dollars on the 17th (local time), up 1.71% from the previous day. The stock has returned to the 20-dollar range for the first time in 40 days, after falling to 17.72 dollars on the 4th of last month.
Coupang Inc.’s share price went through its worst period over the past six months. As the company effectively dominated the early-morning delivery market in Korea and its earnings improved, the stock climbed to around 34 dollars last September. However, it began a steep decline in November, and within three months the share price had been cut in half.
The biggest risk to Coupang Inc.’s share price was the loss of consumer trust. After a personal data leak in November last year, a so-called “Tal-pang” (leaving Coupang) movement spread among Korean consumers. More recently, the Labor Ministry launched a special inspection over alleged concealment of industrial accidents, and the company also sparked controversy by raising the threshold for free delivery for regular members.
The “Tal-pang” movement also showed up in the company’s results. Coupang Inc.’s fourth-quarter earnings last year fell well short of market expectations. Revenue and adjusted EBITDA missed consensus estimates by 3% and 36%, respectively, resulting in what analysts described as an earnings shock.
Park Sang-jun, an analyst at KIWOOM Securities, stated, "The decisive reason for the weak earnings was the sharp drop in consumer trust, which slowed transaction growth in the core commerce business, Product Commerce, and Coupang Eats." He pointed out, "In fact, the company’s revenue growth rate, which had reached 18% in the third quarter, fell to 12% in the fourth quarter, showing a clear loss of momentum."

Even so, many in the securities industry believe that "the worst phase has passed." During its earnings conference call, Coupang Inc. explained that revenue growth in its commerce business has been rebounding since bottoming out between December last year and January this year.
In January this year, the company’s revenue growth rate plunged to around 4%, but signs of recovery have emerged. Overall growth for the first quarter of this year is now expected to come in at around 5–10%. Analyst Park Sang-jun commented, "We judge that transaction trends for the major commerce apps in Korea have passed the worst phase." In line with this, Coupang Inc.’s share price, which had fallen to 16.74 dollars last month, nearing its 52-week low, has recently rebounded and regained the 20-dollar level, laying the groundwork for a recovery.
However, negative factors have not disappeared entirely. Geopolitical risks in the Middle East could become a major variable. A surge in global oil prices driven by conflict in the region is a key factor that could dampen domestic consumer sentiment. If inflation fears flare up again, the consumption boost that Coupang Inc. is counting on could be significantly reduced.
Above all, the prevailing view in the securities industry is that the pace and extent of trust recovery in the Korean market will have the greatest impact on Coupang Inc.’s long-term earnings and share price.
In a recent report, EBC Financial Group warned, "If the scale of class-action lawsuits turns out to be larger than expected or if regulators impose substantial administrative fines, the share price could fall further." The report added, "Through the next quarter, it is likely that the path of cost normalization, the progress of regulatory actions and lawsuits, and spending to defend against competition will matter more for volatility than the growth rate itself."
Meanwhile, it recently came to light that Morgan Stanley, a global investment bank that had predicted the impact of Coupang Inc.’s data leak would be "limited in practical terms," sold a large block of Coupang shares.
In December last year, Morgan Stanley issued a report on Coupang Inc.’s data leak stating that "the practical impact on operations will likely be limited," and it has recently maintained an "overweight" rating on the stock. However, in February this year, the firm reported to the United States Securities and Exchange Commission (SEC) that it had sold about 9.23 million Coupang shares during the fourth quarter of last year (October to December).
fair@fnnews.com Han Young-joon Reporter