Coupang Inc. (NYSE: CPNG) saw its stock price tumble 16.6% to $17.32 in early afternoon trading in New York on Wednesday, after the South Korean e-commerce giant reported a steep first-quarter net loss of $266 million. The red ink was largely attributed to expenses tied to a massive data breach that occurred last year, which has continued to weigh on the company's financial performance.
While revenue for the January through March period rose 8% year-over-year to $8.5 billion, the operating result swung sharply into the red, posting a loss of $242 million compared to an operating income of $154 million in the same period last year. Gross profit slipped 1% to $2.3 billion, with the gross margin contracting to 27.0%. Adjusted EBITDA plunged 92% to just $29 million, representing a razor-thin margin of 0.3%.
Data Breach Fallout Persists
The data breach, which affected approximately 33.6 million customers, has inflicted damage beyond reputational harm. Coupang management noted that the incident drove up cost of sales through customer compensation programs and increased supply-chain management expenses. Operating costs also rose, with spending on fulfillment, technology, and marketing climbing as the company sought to sustain growth momentum despite the slower revenue pace following the incident.
Legal challenges are mounting. The company disclosed that it faces multiple lawsuits, including securities and derivative cases, and it cannot estimate the potential losses on some claims. Coupang also warned that the breach could trigger heightened scrutiny from South Korean regulators, potentially leading to new investigations, enforcement actions, or further litigation.
WOW Membership Rebound
Despite the financial hit, Chief Executive Bom Kim reported a sharp rebound in the company's paid membership program, WOW. He told investors that the "vast majority of WOW members never left" and that by the end of April, Coupang had recovered nearly 80% of the membership drop that followed the breach. Kim described the customer vouchers issued as a "one-time in nature," with most of the impact hitting Q1 and a smaller carryover into early Q2.
Segment Performance
Coupang's core Product Commerce segment, which includes its flagship Korean retail and marketplace operations, generated $7.2 billion in revenue, up 4% year-over-year. However, active customers in this segment grew just 2% to 23.9 million, slipping 3% from the prior quarter. Chief Financial Officer Gaurav Anand attributed the sequential decline to lingering effects of the data incident.
The Developing Offerings segment, which encompasses operations in Taiwan, Coupang Eats, Rocket Now in Japan, streaming, fintech, and Farfetch, saw revenue jump 28% to $1.3 billion. However, losses deepened here, with adjusted EBITDA falling to a deficit of $329 million.
Outlook and Share Buyback
Looking ahead, Anand expects second-quarter revenue to increase 9% to 10% on a constant-currency basis. However, he warned that adjusted EBITDA margin is projected to decline by approximately 300 to 400 basis points compared to the prior year. One basis point equals one-hundredth of a percentage point.
To cushion the blow from the earnings miss, Coupang repurchased 20.4 million Class A shares for $391 million during the quarter. The board also authorized an additional $1 billion for the buyback program.
The broader market implications are significant. Coupang is a key bellwether for South Korean e-commerce, where rapid delivery, loyalty perks, and dense logistics networks drive competition. The company leads Naver, 11Street, and Gmarket among the country's top online shopping platforms, meaning any reputational damage could ripple across the sector. Coupang Korea accounts for over 90% of group revenue, and the unit has faced intense scrutiny following the data breach, which was widely reported by local media including KBS and Yonhap.