Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Nearly 25 years of experience in analyzing hundreds of companies, especially in Asia. Deep expertise in the following sectors:
- Technology (E-commerce, SaaS, Internet)
- Consumer 
- Special Situations/Deep Value Plays
- Holdcos/Stubs
- Asian Unicorns/Private Companies

Korea/Asia, Events, IPOs

Softbank Sells $1.69 Billion Worth of Coupang Post Lockup Expiration - Overhang Concerns Continue

Coupang's Rights Offering - Cash Burn to Increase

Coupang - Decline in Active Customers & Lower Than Expected Sales

Event-Driven

In this insight, we discuss the combination of the end of the lock-up period for Coupang on September 7th and the start of the Amazon Global Store Korea will likely to put further negative pressures on <a href="https://www.smartkarma.com/entities/coupang-inc" target="_blank" data-smartkarma-citation="entities:28425:1" rel="noopener">Coupang (CPNG US)</a>'s shares in the coming days. Starting September 7th, there is a whopping 83% of outstanding shares that could be sold due to the end of the lock-down period.
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In our view, Softbank may try to sell as much of $3 billion in Coupang shares over the next 6-12 months, which represents nearly 5.8% of current market cap. We do believe that Softbank will try to recoup at least its original investment of nearly $3 billion.
A $3 billion investment is a big amount of money. If we assume a 30% per annum ROI required by Softbank (taking into consideration the time value of money of the two investments made in 2015 and 2018), this means that AT MINIMUM, Coupang's market cap would need to be $28 billion (which would suggest $16 per share). At $16 per share, this would represent a further 46% lower levels than the current price of $29.65.
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In this insight, we discuss the combination of the end of the lock-up period for Coupang on September 7th and the start of the Amazon Global Store Korea will likely to put further negative pressures on Coupang (CPNG US)'s shares in the coming days. Starting September 7th, there is a whopping 83% of outstanding shares that could be sold due to the end of the lock-down period.

In our view, Softbank may try to sell as much of $3 billion in Coupang shares over the next 6-12 months, which represents nearly 5.8% of current market cap. We do believe that Softbank will try to recoup at least its original investment of nearly $3 billion.
A $3 billion investment is a big amount of money. If we assume a 30% per annum ROI required by Softbank (taking into consideration the time value of money of the two investments made in 2015 and 2018), this means that AT MINIMUM, Coupang's market cap would need to be $28 billion (which would suggest $16 per share). At $16 per share, this would represent a further 46% lower levels than the current price of $29.65.


End of Lock Up Period + Start of Amazon Global Store Korea = Lower Share Price Likely for Coupang