SoftBank-backed Coupang made a strong start on Wall Street, ending its first trading day with a market value of more than $84bn in the largest US debut for an international company since Alibaba’s listing in 2014.
The South Korean ecommerce giant closed trading at $49.25 per share on Thursday, a 40.7 per cent rise from the $35 that shares were priced at during an initial public offering on Wednesday. Coupang raised $3.5bn from selling new shares in the offering.
Shares in Coupang had opened at $63.50 per share on Thursday, an 81.4 per cent rise from the initial price, and rose as high as $69, which briefly gave it a market capitalisation of $118.3bn, based on the number of shares it had outstanding.
“New York is the financial capital of the world,” said Coupang chief executive Bom Kim, who held a stake in the company worth $11.1bn at the opening price. “The size of the capital raise naturally brought us to the largest capital market in the world.”
Coupang allocated shares in its IPO to less than 100 investor accounts, said people familiar with the deal, an unusually small number for an offering of its size. One of the people said it was the company’s decision to “keep it small”.
Coupang and its investors raised a total of $4.6bn in the offering when including 30m existing shares sold by insiders, including BlackRock and Kim. Coupang previously said it expected to sell shares at $27-$30 before increasing the range to $32-$34 on Tuesday.
SoftBank’s Vision Fund, one of the largest investors in Coupang, owned a stake worth $28bn at the closing price on Thursday.
Coupang’s debut on the New York Stock Exchange made it one of only a handful of South Korean companies trading on US exchanges. The rosy market response showed investors were confident its growth during the coronavirus crisis was sustainable, and that they were willing to overlook recent concerns about workplace conditions at the company.
The expected easing of the pandemic “doesn’t mean that the trend for online shopping is going to slow down”, said Eric Kim, an early investor and former board member of Coupang, and co-founder of Goodwater Capital. He added that “there’ll be some normalisation” around the online retailer’s growth, “but there’s a big part of it that will be permanent”.
Coupang almost doubled its revenues in the past year to $12bn while narrowing its operating losses to $527m.
The Seoul-based group was founded in 2010 by Kim, a Harvard Business School dropout, who will retain more than three-quarters of the voting power after the offering.
Coupang, dubbed the Amazon of South Korea, has risen to dominate the business-to-consumer part of South Korea’s ecommerce market. It promises one-day delivery on almost its entire product selection and offers to deliver a big chunk of its orders in just a few hours. It added 25,000 employees last year.
In a letter to investors last month, Kim wrote that the group’s mission was to “create a world where customers wonder ‘How did I ever live without Coupang?’”
Complaints about the working conditions at Coupang from current and former employees as well as unions and South Korea’s labour ministry have cast a shadow over its growth. The criticisms relate to injuries and deaths among workers and contractors.
Kim rejected the notion that Coupang’s system had led to worker deaths, saying that “technology is actually helping our workers”. He claimed the company has only had one work-related death.
“One is too many, and we will continue to lead on this front, to continue to invest in automation,” Kim said. “We invested hundreds of millions of dollars in automation this past year that have helped make not only deliveries more efficient but easier for workers as well.”
Coupang followed several large tech companies that went public in recent months, including some that have received a boost as a result of the pandemic.
Online gaming platform Roblox, a favourite of preteens stuck at home, entered public markets via a direct listing on Wednesday, with its shares closing at $74 on its second trading day.
DoorDash, which has had demand for its meal-delivery service surge with social curbs imposed over the past year, went public in December with a big pop on its first trading day. The company’s stock price has since declined more than 20 per cent.
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