Investors Continue to Back Coupang Despite Operating Losses

Foreign investors are keeping the faith with South Korean e-commerce giant Coupang despite its continuing operating losses.

Having posted an annual sales revenue of nearly 2.7 trillion won last year, Coupang, one of the world’s fastest growing online reatilors, continues to attract big money investors this year including US asset managers Black Rock and Fidelity.

Coupang raised nearly 420 billion won in investment capital so far this year alone, while sales also grew by over 40 percent year-on-year last year, beating its competitors including SK Planet, Ticket Monster and Wemakeprice.

The online retailer rapidly gained ground in the heavily contested South Korean e-commerce industry in recent years, thanks to its one-day shipping service known as “rocket delivery,” which is available for over 7 million products.

Not everything is rosy, however, as the emerging online retailer suffered an operating loss of almost 639 billion won in 2017, according to the company’s report released last month.

While concerns grow over Coupang’s financial instability, the company argues operating losses are a sign of growth, as it seeks to bulk up through infrastructure expansion and securing further supplies.

Financial concerns over Coupang run deep as the company suffered capital impairment last year, a condition in which a company’s total capital is worth less than the par value of its capital stock.

The worrying reports came as the company has suffered major operating losses for three years in a row, which now amount to over 1.7 trillion won in total.

Coupang is also expected to face stiff competition, with IT giants like Naver branching out into the industry. Earlier this year, retail giant Shinsegae also signed major investment deals with BRV Capital Management and Affinity Equity Partners for its foray into the e-commerce industry.

According to sources close to the investment banking industry, Coupang is receiving investment from foreign investors in the form of pre-IPO via Coupang LL, a US-based holding company which effectively owns Coupang.

Several media outlets have reported CEO Kim Beom-seok have plans to list the company on the NASDAQ in 2020.

Boasting over 4,000 delivery workers and a wide user base of over 25 million, Coupang was described as an “Amazon killer” in South Korea by CNBC last month.

Established in 2010, the South Korean e-commerce giant soon rose to success thanks to fast and affordable delivery services and a wide range of items available, becoming the most popular online retailor in the country, according to the latest brand reputation report released by Korea Reputation Center this month.