The Personal Information Protection Commission on Wednesday ordered Coupang Inc and its logistics subsidiary to pay a combined 624.68 billion won (about $409 million) in fines — the largest penalty ever imposed in South Korea for a personal data breach — after the company leaked the personal information of 37.5 million users and collected members' online activity records without legal basis. Coupang's headquarters in Seoul is pictured that day. [Yonhap]
The Personal Information Protection Commission on Wednesday ordered Coupang Inc and its logistics subsidiary to pay a combined 624.68 billion won (about $409 million) in fines — the largest penalty ever imposed in South Korea for a personal data breach — after the company leaked the personal information of 37.5 million users and collected members' online activity records without legal basis. Coupang's headquarters in Seoul is pictured that day. [Yonhap]

Coupang Inc (CPNG) shares surged after the company received South Korea's largest-ever personal data fine, and investors are now watching whether the rebound can hold. The stock jumped as the confirmed penalty size eased some regulatory uncertainty, but earnings pressure and litigation risk remain as potential headwinds.

Coupang Inc closed at $17.25 on Thursday on the New York Stock Exchange, up 14.09 percent from the previous session. Coupang Inc is the US-listed parent company of Coupang and has traded on the NYSE since March 2021.

The surge followed the Personal Information Protection Commission's decision on Wednesday, when the regulator held a plenary session at the Government Seoul Complex and voted to impose a combined fine of 624.681 billion won ($409 million) and a penalty surcharge of 16.8 million won on Coupang and its logistics subsidiary Coupang Fulfillment Services — the largest personal data sanctions ever levied in South Korea. The commission made the decision public Thursday morning, moving the stock during that session.

The key driver of the rebound was that the fine fell short of the worst-case scenario. Some market participants had floated the possibility of a penalty exceeding 1 trillion won, but the final figure came in at around 624.6 billion won. Investors appeared to conclude that, with the regulatory risk now quantified, a degree of uncertainty had been removed.

Industry observers said the fine landing below market fears led investors to treat the regulatory risk as manageable. The relief from that uncertainty, they said, was reflected directly in the share price after the announcement.

The stock's steep prior decline also set the stage for a rebound. Coupang Inc shares had fallen from $26.06 on Dec. 10 last year to $15.12 on Wednesday — a drop of 41.98 percent since the personal data issue came to the fore. Just before the fine was announced, the stock was trading near its 52-week low of $14.92.

Market capitalization had similarly contracted, shrinking from roughly $46.8 billion at the end of last year to about $27.1 billion on Wednesday — a decline of approximately $19.6 billion, or around 42 percent, in six months. Thursday's surge pushed the estimated market cap back to roughly $31 billion, though that still leaves it at about two-thirds of its level before the data privacy issue emerged.

Whether Coupang Inc can sustain a lasting upward trend remains to be seen. The 624.6 billion won fine is roughly equivalent to the company's full-year operating profit of 679 billion won last year, meaning it could weigh on second-quarter earnings once recorded as an accounting expense. Legal proceedings, the cost of strengthening data protection systems, and the possibility of class-action lawsuits are additional variables.

Coupang said it regrets the commission's decision and intends to clarify the facts through legal channels. The timing of the fine payment, how it is reflected in the company's accounts, and any additional legal costs are expected to be the key variables shaping Coupang Inc's share price going forward.


kacew@heraldcorp.com