"Limited Customer Attrition"... JP Morgan's Optimism on 2 Trillion Won Loan to Coupang

JP Morgan Releases Outlook Report on Coupang Data Breach
Coupang’s Dominant Position in the E-Commerce Market Highlighted
Potential Compensation Measures Expected to Limit Customer Attrition
Coupang’s $1.5 Billion Debt Guarantee for Coupang Inc. Under the Spotlight

As Coupang, the largest e-commerce platform in South Korea, faces the greatest crisis since its founding due to a massive personal information leak affecting 33.7 million cases, global investment firm JP Morgan has released an analysis stating that “potential customer attrition at Coupang will be limited,” drawing attention to the background of this assessment.

According to the financial investment industry on December 3, JP Morgan stated in a report published on December 1 (local time), “Coupang has established a unique position in the Korean e-commerce market through Rocket Delivery, lowest price services, and membership benefits, and Korean customers appear to be less sensitive to data breaches,” forecasting limited impact from the incident.

JP Morgan added, “Due to multiple data breach incidents this year involving SK Telecom, KT, Lotte Card, and GS Retail, Korean consumers’ sensitivity to such issues has decreased. Additionally, Coupang’s potential compensation measures, such as free coupons, further support this outlook.”

However, JP Morgan also noted, “There is a high possibility that Coupang will provide a voluntary compensation package and that the Korean government will impose a potential penalty, which could result in a significant one-time loss. This is expected to weigh on investor sentiment in the short term.”

With the government discussing the introduction of a punitive damages system in relation to this incident and consumer movements toward collective lawsuits gaining momentum, pressure on Coupang is intensifying. JP Morgan’s optimistic outlook is seen as having influenced investor sentiment. In fact, on December 2 at the New York Stock Exchange, Coupang’s share price closed at $26.71, up 0.23% from the previous day. This marks a rebound just one day after the stock had plunged 5.36% on December 1, immediately following the disclosure of the data breach.

This has also drawn attention to the debt relationship between JP Morgan and Coupang. According to the Financial Supervisory Service’s electronic disclosure system, Coupang, on June 2, provided a debt guarantee for $1.5 billion (approximately 2 trillion won) borrowed by its parent company, Coupang Inc., a listed company on the New York Stock Exchange, from a syndicate of lenders including JP Morgan Chase Bank. This amount is equivalent to 58.55% of Coupang’s standalone equity capital of 3.5735 trillion won at the end of last year. The guarantee period runs until June 2, 2030. Previously, Coupang had also extended its guarantee until February next year for $1 billion in borrowings by Coupang Inc. through JP Morgan and others since 2021. It is estimated that these borrowings have been used for Coupang’s infrastructure development and global investments through its U.S. headquarters.