South Korean ecommerce firm Coupang could be worth € 42 billion in its New York IPO if it is valued online with Amazon, or a third of that if investors prefer to be cautious about its growth prospects in its small, mature market.
Founded in 2010, it has become the country’s leading online shopping giant, with nearly 15 million active customers, compared to a population of 50 million. Like Amazon, it has created a formidable logistics network: it delivers orders placed before midnight at dawn, and for free.
High costs, as well as the price war with physical rivals like E-Mart and Lotte, have weighed on profitability. In 2018, SoftBank’s Vision Fund injected 1.7 billion that valued the company at 7.4 billion.
Now, Coupang is targeting a price tag of $ 42 billion, roughly in line with the multiple of 4 times Amazon’s revenue. Thanks to the pandemic, Coupang’s top line nearly doubled, to $ 10 billion, in 2020. Annual operating losses have also dropped, to $ 436 million. But it is much less diversified than Bezos’ firm (which has cloud computing, streaming). So it’s more like Walmart, which is growing more slowly and more focused on retail.
Suppose Coupang’s annual sales growth halves this year, to 45%, as consumption patterns normalize. With Walmart’s multiple, 1 time, Coupang is worth less than $ 12 billion. The Chinese JD.com trades with a similar multiple, despite the fact that it foresees an increase in sales of 20% per year in the next two years. That could be Coupang’s pace in a few years, if his ambitious push into food delivery, streaming and other activities doesn’t work very well there.
Other listed Korean web giants, such as the profitable Kakao super app, have higher multiples than both of the US retailers Coupang’s foreign IPO might not be all that special.