Much attention is now paid to whether Coupang, the largest e-commerce platform in South Korea, will be listed on the KOSDAQ as the first Korean version of Tesla. As the company raised 1.1 trillion won (US$975.61 million) of investment from Japanese telecommunication giant SoftBank in 2015, its corporate value was estimated at 5.5 trillion won (US$4.88 billion). Accordingly, the market capitalization of Coupang is expected to surpass those of retailers listed on the local stock markets after an initial public offering (IPO).
The Financial Services Commission (FSC) introduced a system called Tesla requirements in January this year that allows unprofitable but promising startups to go public by revising the market listing requirements. The decision came after Tesla, a U.S.-based electric carmaker, has emerged as a global leading company after being recognized as having the best technical skills and listed on the NASDAQ stock market, though it was in the red. It is surprising that the online retailer has become the first Korean version of Tesla, which draws much attention from the market. When the FSC announced to adopt the Tesla system, the first Korean Tesla firm will be a company dedicated to the Internet of Things (IoT), virtual reality (VR) or biotechnology.
According to investment banking industry sources on April 4, Coupang is currently picking out its IPO manager. The company is seeking to go public under the Tesla requirements. Firms with market capitalization of over 50 billion won (US$44.35 million) in terms of offering price, annual sales of over 3 billion won (US$2.66 million), and sales increase of more than 20 in the past two years, can go public on the KOSDAQ. As it bets on companies’ growth potential rather than performance, IPO managers share the responsibility. If the stock price of companies listed under the Tesla requirements goes down by more than 10 percent compared to offering prices within three months, IPO mangers needs to buy back the stocks of IPO investors at prices which are 10 percent lower.
Coupang has been a well-known company which only aims for NASDAQ listing among domestic IPO managers. After Coupang CEO Kim Beom-seok officially announced his plan to list the company on the NASDAQ in 2011 to commemorate the first anniversary of launching the services, Coupang succeeded in raising US$100 million (112.75 billion won) from Sequoia Capital and US$300 million (338.25 billion won) from a consortium led by BlackRock in 2014 and US$1 billion (1.13 trillion won) from SoftBank in 2015. However, the company has had difficulties in NASDAQ listing. After a debut on the NASDAQ at US$20 (22,550 won) in 2011, Groupon, a U.S.-based deals and discounts platform, saw its closing price fall to US$3.89 (4,386 won) on the 3rd. If the corporate value of Coupang is not properly appraised, the company needs to change the market. In addition, it cannot keep postponing the listing. In particular, the Tesla listing system is a new way out for Coupang as the company has been recording losses due to the intense competition.
Coupang posted 547 billion won (US$492 million) in operating loss in 2015, which is bigger than the previous year. The company is scheduled to announce its performance for last year in the middle of this month, but industry watchers predict that Coupang still marks deficits. However, Coupang said that the company is inevitably in the red because it is time for investment to grow. The company said that it cannot stop making an investment in order to compete with other e-commerce companies, open markets and large discount stores, though its sales are increasing. In fact, Coupang saw its sales surge from 348.5 billion won (US$309.09 million) in 2014 to 1.13 trillion won (US$1 billion) in 2015.
Notably, Coupang keeps seeking business innovation in its bid to jump up to be an e-commerce giant beyond social commerce platform. The company plans to not only sell products online but also focus on platform businesses based on the online business, just like Chinese e-commerce giant Alibaba and Amazon. To this end, Coupang recently announced to put an end to its social commerce service and focus on its direct purchase services and open market businesses. The company is expected to release its earnings in the middle of this month and undergo screening in preparation for going public on the KOSDAQ. It takes three months to complete the listing after that so the first Korean version of Tesla will be born as early as July.
In the meantime, the spoke person at Coupang denied the company’s going public when BusinessKorea called him to confirm its trail of IPO.