[Initial Perspective] The Difference Between a '5 Trillion' and a '50 Trillion'

Yanolja and Naver Webtoon Enter Nasdaq
Bitter Feelings Over Native Platforms' US Listing
Same Company, Different Values in Korea and US
Need to Find Ways to Enhance Attractiveness of Korean Market

The accommodation platform ‘Yanolja’ has chosen to list on the U.S. Nasdaq (NASDAQ) stock exchange through an IPO. To list as a U.S. company, it reportedly established a local corporation in Delaware, known as a tax haven. The company’s valuation at listing is said to be a staggering 10 to 12 trillion KRW. It is a cause for celebration that a motel rental business started with just 50 million KRW has grown into an accommodation platform worth over 10 trillion KRW and is now stepping onto American soil. Recently, Naver Webtoon also set its sights on Nasdaq to increase its corporate value. Now that they have drawn their swords, we hope they attract as much overseas capital as possible for investment through a successful listing. With the secured funds, we look forward to their growth into a global platform competing with formidable platforms like ‘Booking.com’ and ‘Trip.com’. We hope this will bring achievements in the globalization of domestic platforms that have remained local.

On the other hand, it is saddening that the Korean stock market is not capable of accommodating native platform companies. These days, individual investors are flocking to the U.S. market, and there is a sense of self-doubt whether promising new native companies find listing on the domestic stock market attractive. This feeling is similar to what was experienced when Kim Beom-seok, chairman of Coupang’s board?once viewed with a skeptical eye as a ‘black-haired foreigner’?listed the distribution platform ‘Coupang’, which was built on Korean soil, on the New York Stock Exchange (NYSE). Seeing the Korean flag displayed on the wall of the New York Manhattan Stock Exchange during Coupang’s listing somewhat eased the disappointment.

We cannot blame platform companies for choosing the U.S. market. All these companies have suffered or are suffering from controversies over overvaluation in the Korean market. Coupang, which listed with a corporate value of 50 trillion KRW, received valuation proposals of about 5 trillion KRW from domestic underwriters while considering listing on the Korean KOSPI. Foreign investment banks (IBs) proposed valuations ten times higher, but the choice was obvious. Yanolja, which is pushing for a Nasdaq listing with a valuation of 10 to 12 trillion KRW, is reportedly valued at less than half that amount by domestic underwriters. Another accommodation platform competitor, ‘Yogi-otdae’, is being discussed in the M&A market at around 1 trillion KRW. There are also rumors that Yanolja is abandoning a sale and turning toward Nasdaq listing after news of its 10 trillion KRW valuation surfaced.

Criticism or condemnation such as "It’s an unprofitable company, so it’s nonsense," "It’s an excessive overvaluation," "The valuation method is too favorable to the company," and "Investors who invested at a high price are all stuck" are possible. During Coupang’s listing, there were even talks of ‘valuation fraud.’ Coupang’s market capitalization once rose to 100 trillion KRW after listing but then showed a long-term downward trend to the 20 trillion KRW range due to continued losses, recently recovering to around 50 trillion KRW. Chairman Kim succeeded in rapidly building a domestic logistics system with the tens of trillions of won raised through new share issuance, just as Amazon did in the U.S., growing Coupang into the overwhelming number one distribution company domestically.

Why is the same company valued at 5 trillion KRW in Korea but 50 trillion KRW in the U.S.? It is because the amount of investment capital in the stock market of the world’s largest economy is enormous. Although it is difficult to catch up all at once, can we not make our stock market more attractive? Can the government’s value-up policies alone attract a lot of global investment? What about the financial investment tax? Inheritance tax? Short selling? Capital market systems such as listing procedures? Fairness, equity, and investor protection are important, but if we do not consider ways to enhance the market’s attractiveness in various aspects, won’t we continue to witness investors and leading companies being taken away to overseas markets?