Amid deteriorating profitability at Coupang due to penalties for personal information leaks and logistics center fires, the impact of large-scale share buybacks also appears limited. As Q3 losses exceeded market expectations, after-hours stock prices fell following the earnings release. However, expectations are emerging for future performance and stock price recovery as Wow membership numbers hit an all-time high and the Taiwan business continues its growth trend.
According to Coupang's Q3 earnings report filed with the U.S. Securities and Exchange Commission (SEC) on Wednesday (Korea time), Coupang purchased 12.7 million shares of its own stock for $201 million (approximately 287 billion won) in Q3 this year. The cumulative purchase volume from Q1 to Q3 this year reached 56.4 million shares, or $1.1 billion (approximately 1.57 trillion won). As of the end of September, the remaining limit for additional purchases was $706 million.
Following its approval in May last year of a share buyback program of up to $1 billion to enhance shareholder value, Coupang additionally approved a $1 billion purchase limit in May this year.
However, Coupang's stock price has recently fallen by more than 50% compared to the $32 range recorded in October last year, hovering around $15. Concerns over deteriorating profitability have grown as the company has posted losses for three consecutive quarters since the beginning of the year, failing to realize the effects of large-scale share buybacks.
The stock price remained weak even after this earnings release. On the 3rd (local time), Coupang's stock closed at $15.23 on the New York Stock Exchange (NYSE), up 3.61% from the previous day, but fell to $14.69 in after-hours trading following the earnings announcement, completely giving back the gains from regular trading hours.
The stock price decline is interpreted as being influenced by profitability that fell short of market expectations. Coupang's Q3 revenue was $9.962 billion (14.2209 trillion won), exceeding Wall Street forecasts. Conversely, the operating loss was $450 million (642.3 billion won), more than double the expected loss of $194.2 million aggregated by Bloomberg.
Following penalties and customer compensation costs related to the personal information leak incident, Q3 also reflected costs associated with the Incheon logistics center fire, causing the cumulative operating deficit from Q1 to Q3 this year to swell to 1.8318 trillion won.
Despite deteriorating profitability, the customer base expanded. Coupang's active customers in product commerce in Q3 numbered 25.2 million, a 2% increase year-on-year.
Kim Beom-seok, chairman of Coupang, stated during the Q3 conference call, "Wow membership numbers reached an all-time high, increasing both compared to the same period last year and the previous quarter," adding, "Customers who left after the personal information leak incident are returning, and new member inflows continue."
The growth of the Taiwan business is also positive. The number of Wow members in Taiwan increased by more than 100% year-on-year and by 14% compared to the previous quarter. With more than half of the population in Taiwan currently included in areas covered by the dawn delivery service, Coupang plans to expand investments in delivery infrastructure and supply chains.
The securities industry is also paying attention to the expansion of the domestic customer base and the growth potential of the Taiwan business. Major investment firms such as Bank of America, JPMorgan, and UBS are citing this as a basis for presenting target prices in the range of $24 to $28.
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