Money-burning Coupang is dreaming of an IPO next year

Coupang’s initial public offering (IPO) may come in early 2021, Bloomberg reported Thursday, but the Korean e-commerce start-up still faces many hurdles ahead as it seeks to enter the public markets, analysts say.

Bloomberg reported Thursday that the e-commerce company is planning to go public next year, citing an anonymous insider who said the start-up has already begun revising its tax structure.

Considering its dismal results, in which it recorded 1.09 trillion won ($940 million) in operating losses in the 2018 fiscal year, a successful IPO in 2021 is “questionable” analysts say.

Coupang, founded by Bom Kim in 2010, is often called a Korean equivalent of Amazon, having brought meaningful changes to the landscape of Korea’s online shopping and logistics, which has long been dominated by conglomerates.

Helped by its signature next-day delivery, called rocket delivery, followed by dawn delivery, which gets ordered products to the doorstep by 7 a.m. - as long as ordered before midnight - Coupang was able to grow in volume.

Sales hit 4.4 trillion won in the fiscal year of 2018, a 64.9 percent year-on-year jump. Compared to 2013, the sales are up 12-fold.

It drew hefty investment from SoftBank.

In 2015, Softbank invested $1 billion, followed by another $2 billion in 2018 from Softbank Vision Fund.

At the same time, its net loss grew exponentially as it poured money into its rocket delivery logistics service and other investments.

Its operating loss came at 547 billion won in 2015, followed by 565 billion in 2016 and 638 billion in 2017. The accumulated loss is said to be over 3 trillion won as of 2018.

Considering its lack of profitability, analysts expected Coupang to go public in overseas markets such as the Nasdaq, which allows unprofitable enterprises to go public.

“If it goes public in the United States, it will receive conservative valuation considering the latest IPO failures such as WeWork,” said Yoo Seung-woo, an analyst from SK Securities.

“It might initiate a fulfillment service earlier than expected to show its profitability and growth to investors,” he added.

Going public next year might be a hasty move.

“Profitability is the key in a successful IPO for start-ups as shown in [the] Uber and WeWork cases,” said Lee Jin-hyeob, a retail analyst from Yuanta Securities.

“But with Coupang, which recently voluntarily gave up its license to do third-party logistics, it would be hard to carry out the fulfillment service anytime soon. There is so little time to show profit to investors,” Lee added.

Coupang didn’t offer any details.

“We have always wanted to go public,” said a Coupang spokesman. “But when and where are not yet confirmed.”

BY JIN EUN-SOO [jin.eunsoo@joongang.co.kr]