Coupang (CPNG.US) data breach results in over $1.1 billion in compensation, Citigroup cuts target price but still recommends "buy"

Recently, Citigroup published a research report on the South Korean e-commerce giant Coupang (CPNG.US). Coupang announced a compensation plan of up to 1.7 trillion Korean won (approximately 1.7 billion US dollars) for the customer information data breach incident, covering 33.7 million affected customers with each person receiving 50,000 Korean won. Citigroup lowered its net profit expectations for 2025-2027 by 2%-18% and reduced its 12-month target price from 35 to 28 US dollars, but still maintained a buy rating. Earlier, South Korea's largest online retailer Coupang was hit by a data breach scandal that lasted for several months starting from June 2025, affecting almost two-thirds of the South Korean population. The leaked information included names, phone numbers, email addresses, and delivery details. Its CEO Park Dae-jun has resigned due to the massive data breach incident. Coupang announced that Harold Rogers, the Chief Executive Officer of its US parent company Harold Rogers Corporation, will serve as interim CEO. In response to the extensive customer information data breach incident, Coupang announced a compensation plan to provide 50,000 Korean won compensation to each of the 33.7 million customers affected by the data breach, with a total amount of up to 1.7 trillion Korean won, equivalent to 3% of the company's market value, 2% of its enterprise value (EV), or 48% of the expected EBITDA for the 2026 fiscal year. Monthly active users (MAU) / gross merchandise volume (GMV) trend After the data breach, according to WiseApp's estimates, the GMV of Coupang's e-commerce business increased by 23% year-on-year as of December 28, 2025 (up to the end of the month, MTD), which was not significantly different from the 20% year-on-year growth in October-November 2025. Although Coupang's 20% GMV growth rate was slightly higher than Naver's 18% in October-November 2025, its 23% year-on-year growth rate as of December 28 was lower than Naver's 32% at the same time. In terms of the weekly trend of daily active users (DAU), Coupang's weekly average DAU increased by 7% compared to the previous week from November 30 to December 6, 2025; however, in the weeks of December 7, 14, and 21, the weekly average DAU decreased by 9%, 1%, and 3% respectively. Despite the decline in DAU over several weeks, Coupang still maintains its leading position in the South Korean e-commerce industry in the long term. Fourth quarter performance preview for 2025 The firm predicts that excluding compensation-related expenses, Coupang's revenue for the fourth quarter of 2025 will reach $9.2 billion, an increase of 15% year-on-year; adjusted EBITDA will be $482 million, an increase of 14% year-on-year, consistent with market consensus. Adjusted EBITDA for the product e-commerce business is expected to increase by 33% year-on-year, mainly due to continued optimization of operations and supply chain; while the adjusted EBITDA for the developing business (mainly in the Chinese and Taiwanese markets) is expected to have a loss of $237 million. Target price reduced to $28 To reflect more conservative non-operational project assumptions for the 2025 fiscal year and higher actual tax rates for the 2026-2027 fiscal years, Citigroup lowered its net profit expectations for 2025-2027 by 2%-18% and reduced its 12-month target price from $35 to $28. Nevertheless, the firm still maintains a buy rating. Despite this, Citigroup believes that Coupang's stock price has fallen by 14% as of December 2025 (since November 29, when the company disclosed an increase in the number of affected customers to 33.7 million), exceeding the potential dilution of enterprise value (EV) brought by the fine and compensation plan. At the same time, Coupang is expected to continue maintaining its strong leadership position in the South Korean e-commerce industry.