On Feb 12, 2021 Coupang 쿠팡, South Korea's largest e-commerce company filed its prospectus to go public on the New York Stock Exchange. Its expected valuation of US$50 billion could make this the largest listing by a foreign company in New York since Alibaba's 2014 IPO.
Coupang is ranked #3 on CNBC Disruptor 50's 2020 Most Innovative Startup List for its innovative approach to logistics. The online retail market in South Korea is expected to rise from $128B in 2019 to $206B in 2024, and Coupang is a leading player in this market. The IPO will include 120M shares, at $27 to $30 each, the market cap is estimated at $48.65B.
- Detailed instructions how to participate in Coupang (pre-IPO, offering price) see below👇
What is an IPO and how it works
IPO is a process of offering shares of a private corporation to the public in a new stock issuance. Why go public? The primary benefit of going public is easier access to capital.
To go public, a company must have a track record of growth and other favorable results and hire an investment bank (in Coupang case Goldman Sachs, Allen & Company LLC, J.P. Morgan, HSBC, BofA Securities, Deutsche Bank Securities, UBS Investment Bank, Citigroup, Mizuho Securities, CLSA) to come in and underwrite the IPO. The underwriters also performed due diligence and verified financial information and business model.
Once the paperwork done, the company sells the stock to institutional investors. When the initial block of shares has been sold, the company with underwriters' help sets an initial price and date for the stock to begin trading on a stock exchange.
Company Profile and Financial Indicators before Coupang IPO
Coupang is South Korea's largest e-commerce company. Coupang was founded in 2010 and is currently one of the top three private employers in the country. Coupang has its own delivery system, unlike well-known online retailers in other countries that use third-party services to do so.
Market watchers have been largely optimistic about Coupang's financials, even as the company is still loss-making. In its prospectus, the firm revealed a near-doubling of total net revenue to US$12 billion for FY2020 ended December, while narrowing its full-year net loss 32 per cent to US$474.9 million.
Coupang also is also a major player in on-demand delivery, with key offerings including Rocket Fresh, which provides same-day delivery of fresh food, and food delivery service Coupang Eats. The company has also ventured into fintech with Coupang Pay.
In accordance to analytics, Coupang could generate net revenue of US$16.5 billion for 2021 and US$19.9 billion for 2022.
- Earnings in 2020: $11.97B
- EBIT in 2020: $-528M
- Net Profit in 2020: $-475M
- Net Debt in 2020: 0
How to Buy Coupang Stocks Before the IPO (Offering Price)
In the past, IPOs as highly profitable investments were available only to the privileged customers of the leading brokerage firms and it was challenging for retail investors to gain access. You couldn't buy shares paying the price set by the company and you had to wait until the shares actually start trading on the public stock market at whatever stock price supply and demand allows.
Technologies and marketplaces changed the rules of the game, now regular investors can get pre-IPO shares. To participate in Coupang IPO you need to use an IPO investing app like Freedom Finance (NASDAQ: FRHC), TD Ameritrade or Fidelity. They give its customers access to IPOs and secondary offerings through their existing brokerage account. Also you can buy Coupang shares when the company goes public via a commission-free trading app like eToro.
🚨 Detailed Instructions How to Participate in the Coupang IPO before public trading:
Below we share the instruction how to participate in the approaching Coupang IPO using Freedom Finance (Tradernet platform). This marketplace is chosen as an example because almost all high-profile IPOs are traded via this platform
- Pros: almost all high-profile IPOs are available for participation via Freedom Finance, no eligibility requirements, no number of previous trades needed and low minimum investment amount for participating in an IPO.
- Cons: the user interface of the platform is a bit outdated.
* Freedom Finance services are NOT available to US citizens and residents.
- Apply for a Freedom Finance account — you need to prepare your identity document and a document confirming the address of residence (utility bill). The verification process is very fast, it will take 2 minutes to create your account.
- Deposit your account — to participate in an IPO, your account must have available funds in the amount you send IPO application for.
- 💡 Tip: It's recommended to deposit your account in advance. Often the exact IPO date is undefined until the last day. You may have a short notice for participation and account deposits also takes time for processing. Also, sometimes Freedom sends last-minute IPO offer when you have 2 hours to participate.
- Submit a request to participate in the IPO — when applications are open select Coupang and click Participate in the IPO > input the amount you want to invest > Send your application. Note: Before the book closing, a request can be withdrawn. At the time of the book closing, 1 day before the start of the exchange trading, the specified amount will be blocked on the account.
- Wait for allocation — The actual number of stocks purchased during an IPO depends on supply and demand. The higher underwriter reserves the right to partial execution of collective applications. So if the demand is high you may get less than you applied for. Of course, you will only pay for the shares purchased. The rest of the funds will be returned to your account.
- Start of trading — With the beginning of the public trading on the stock exchange, the purchased shares will appear on the account and a lock-up period will start — a 93-day period of prohibition on sale. You can’t sell stocks, but you can track their current value and growth indicators in your personal member area and a trading terminal.
- Closing your trade — At the end of the 93 days lock-up period, you will be able to manage your stocks at your discretion — leave in the portfolio or sell and withdraw money or transfer the stocks to another depository/ broker in your name. This can be done in your account by clicking the ‘Sell’ button next to the name of the security. In this case, a commission of 0.5% of the amount of the sale transaction is charged.
Is investing in IPOs profitable?
Not always. The average return at the end of the lock-up period is 72%, past IPOs data.
When is the Coupang IPO date?
March 10, 2021
What is Coupang IPO price range?
$27.00 to $30.00 per share.
How to Invest in Coupang after the IPO date (opening price)?
In what currency Coupang IPO and post-IPO shares will be traded?
The Coupang IPO and stock trading currency will be USD.
If you have funds in another currency the cheapest way to convert your currency is to use the mid-market rate (that’s the one you’ll find on Google) which can be done via a fintech service like Wise. Banks may add hidden markups to their exchange rates - charging you more without your knowledge. And if they have a fee, they charge you twice. Wise never hides fees in the exchange rate.
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What is the Coupang (stock symbol)
Sources used: SG Business Times