TLDR: the IPO will be big, balance sheets seem promising, Coupang will be competing against Amazon and Alibaba and probably will be able to handle them.

Topics

• What is Coupang? Why NYSE instead of NASDAQ?

• What does their balance sheet look like?

• What will pull Coupang back and push forward? (competition landscape)

• How can I do my own research from Korean news?

What is Coupang?

'It is equivalent of Amazon, DoorDash, and Instacart in one company' that was founded in Korea in 2010. News broke out that Coupang is filing for an IPO few days ago, dubbed as a potential biggest IPO in NYSE's history and one of the most anticipated ones. It has been sought after for acquisition by Amazon & Alibaba and the likes before but didn't work out, while Softbank's Son Masayoshi backed Coupang, owning almost 40%, other notable backers being BlackRock and Fidelity. Their IPO is anticipated to be ~50 billion, originally ~30 bil. on 12 Feb 2021. Masa's Vision Fund also invested in DoorDash and gained 10 bil. from it, and has already made 17 bil. from his investment into Coupang over the couple of years -- the biggest contributor to his Vision Fund. For one comparison, Alibaba has made him 60 bil.

Why NYSE instead of NASDAQ or even the Korean stock market?

The main point made by analysts for NYSE was due to differential voting right shares, with NYSE enabling class A and B types. This means that Coupang stock votes won't be diluted therefore makes hostile takeovers difficult (in other words, 1% ownership in shares can still give you 30% voting share). Of course, the CEO Bom Kim will be holding class B.

What does their balance sheet look like?

Last year, they grew 90% at over 10 bil. in sales, but still showing net negative for years (side note: Masa invested into Coupang in 2018). Coupang does get some positive feedback from reducing their net negative balance sheet, but their growth in customer base is an important indicator to note. (sourced: https://www.youtube.com/watch?v=a3YLdCaZ4-g)

What will pull Coupang back and push forward?

Alibaba and Amazon are currently the giant gatekeepers of the e-commerce. Understandably, these two companies puts China and US #1 and #2 in the e-commerce world. Currently, Korea is #5 globally, and was expected to become #3 in a few years even before the Coupang IPO news broke out.

The biggest notable achievement for Amazon vs. Coupang right now is that Amazon, out of all the countries they have taken over, has failed to take over Korea. E-commerce market is very well saturated and more advanced in Korea, with Coupang in the front. Robot delivery is normalising in Korean culture, as well as ad spaces in Korean train stations as grocery stores (example A and example B). Amazon Prime handles two-day or one-day deliveries to most home addresses in the US, but in Korea, even food delivery is achieved within minutes even for awkward destinations such as under some bridge.

This means that while Coupang has the technicalities and the know-how with its advancements, the main point of concern (and probably the only major concern) is to be able to handle Amazon and Alibaba money flexing.

Then there is AI. This is a huge grey area for anyone right now, because it's an entirely new industry. Well, AI is already here, but it's still at its infancy, and integration into e-commerce is also another story. As you might already know, US and China are the big front-runners of AI with Silicon Valley and Shenzhen Zhongguancun, but what about Korea? Here is a short story.

AlphaGo happened in 2016 (trailer of documentary, full movie free on YouTube if you're interested). In short, DeepMind (acquired by Google) produced an AI that beat the top professional go/baduk player in the world. It was anticipated that this won't happen for at least another decade or two (relevant xkcd). Pretty much the entire country watched the matches and it was a wake up call. The Korean government set aside a budget for AI and kept revising the budget every year since, increasing it again and again and now is considered to be a dark horse to a potential world leader in the global AI race, and currently makes Korea with the highest AI investment per capita. An entire AI startup city was summoned into existence as a special economic zone, and within Korea's focus on AI, Samsung alone announced three new AI products in 2020, for example.

This makes Coupang not exactly comfortable, but in a lot more neutral position standing next to to Amazon and Alibaba AI developments, and I wouldn't be surprised if Coupang came out on top in terms of AI if you were to look at other Korean tech industries as examples. Furthermore, Amazon recently changed CEO, which signaled more focus on AWS/cloud infrastructure services with a hint of Jeff's focus on the space race. This shows Coupang's IPO timing to be more sensible.

They also have domestic competition as well. There are around 10 other e-commerce competitors, as well as general IT platform competitions, mainly Naver (also backed by Masa) and Kakao. Such businesses include fintech, financing, cloud, streaming (OTT media), etc.

How can I do my own research from Korean news?

For English, Korea Herald is considered to be the only neutral news source that comes with official English translations.

Otherwise, I would recommend Papago translator, which does a much better job than Google Translate when it comes to Korean, to translate the news sites below.

The big three Korean online news sites are https://news.naver.com, https://news.nate.com, and https://news.daum.net, probably 'world' (국제) 'science/IT' (과학/IT) and 'economy' (경제) sections would be the go-to.

Thanks for reading. I didn't really want to post in bigger subreddit like /r/investing, /r/stocks, etc, so I came here. I hope that this is permissible. This is also my first DD. Please let me know what you think may be missing or how the presentation could be reordered or rearranged. Again, thanks!