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B (4:51)

Heard from listener Alejandro who asked that we cover Coupang, that's a South Korean e commerce company that is a member of the Fortune 150 and draws comparisons to Amazon. Now the company is headquartered in the United States. Stock is also listed here, but it does nearly all of its business in South Korea. And it's been making headlines over the past few months for a reason that no company wants to be attached to it has admitted to a massive data breach. And we're going to get to that story and the unbelievable scale of it in just a moment. But first, John, give us some background on Coupang.

C (5:25)

Coupang trades. As you mentioned on the New York stock exchange ticker, CPNG has a market cap of $28 billion. The company was founded in 2010 as a daily deals business. Think Groupon by Korean American billionaire Bomb Kim. Well, he wasn't a millionaire, a billionaire at the time. This company made him a billionaire. He graduated from Harvard and then subsequently dropped out of Harvard's MBA program to start the company and it pivoted to E Commerce and it won major backing from SoftBank in 2020. 21 had a significant IPO.

B (5:57)

So can we just talk about Groupon for a second? Yes, I loved Groupon. Did you use Groupon when it came to. Absolutely. So I look for it now and it still is actually out there, but I feel as though it doesn't get the same buzz and visibility as it used to.

C (6:08)

I agree. In fact, I had forgotten about it and then I went to use it and got two for one at an Indian dinner in D.C. two years ago. And I thought, I didn't, I didn't know it still existed, but I think there's pockets of the country where it's more popular than other places.

B (6:20)

Well, it inspired the creation of Coupang. And just to put it in some context, the company went public in March 2021. Market cap debut. This is extraordinary. $84 billion. So just again, think about it. This company had been founded only 11 years earlier. Stock though, down 67%. Then it's joined a number of its peers that went public in those go go days of IPOs in the very, very low interest rate environment, which was also unfortunately, the COVID 19 pandemic. The stock though not only has not recovered, it has boped down another 5% over the last 12 months. And this is fascinating because the company is often compared to Amazon, focuses on fast delivery and says that its special delivery service, it's called Rocket Delivery Service, sees 99% of orders delivered when a day, within a day. Which by the way, John, when we think about this, we know that the folks like Amazon and Walmart here in the United States are absolutely at war with each other to try and get their delivery down to as fast as possible. And just to think this company is doing 99% of orders within a day. Different configuration of urban areas in South Korea, though I will say different population densities that perhaps make this a Bit more possible just given that the layout of the United States, the urban and suburban area here looks quite different. Well, the company does have something called the wow. Membership, Great name. Which is similar to Amazon prime and it includes free shipping and returns. So the coupon user is getting all of those benefits in addition to that of speed.

C (7:52)

Right. And I spent some time on their website today on investor relations and they're pushing that. There was one pitch where they said, do you remember when two day delivery was impressive? Well, we've blasted past that. So the company is really emphasizing the same day. And according to some of the materials on their site, customers can order quote everything from TVs to tomatoes by midnight and receive orders by 7am the next morning. And so similar to Amazon and Walmart, like you said, they've been expanding into groceries just like that tomato.

B (8:20)

That's, that's extraordinary. But order by midnight, received by 7am well, their latest earnings came out in November. Alejandro, who sent in the request that we cover this, pinged us a little bit afterwards. And it's an interesting place to go look at to see what's been pulling that share price down specifically over the last 12 months. Net revenue was up in that November earnings report hitting $9.3 billion, up 18% year over year. But operating profit of $162 million fell over 40 million short of what had been estimated. And a serious issue here is the cost structure. There's the impact of tariffs too, by the way. We think about it from the US consumer perspective. We forget sometimes that it's actually, you know, there's global impact on this, but there's one other big issue out there, right?

C (9:06)

And it's competition. And so let's start with China, the competition they're getting from that country. In 2024, Alibaba announced a $1.1 billion investment to build logistics local sellers in South Korea.

B (9:18)

Yeah, Alibaba. Let's talk about Alibaba for a sec.

C (9:20)

Yeah.

B (9:21)

Because actually we don't enough. Maybe at some point we need to do an Alibaba deep dive. Alibaba is an absolute mammoth of a company. Ticket Baba also traded here, you know, in the United States. You'd imagine given that ticker market cap, $387 billion. Its sheer size is impressive. $137 billion of annual revenue. It's overshadowing through its scale the $30 billion plus of coupons annual revenue. Alibaba over four times bigger there. And Alibaba is really One of the OGs of E commerce in China. Alibaba is the Amazon of China and frankly of Asia more broadly. So if your coupon and Alibaba wakes up in 2024 and says I'm coming for your market and I'm going to drop a billion dollars into being able to do so, the market takes notice and you as coupang really have to come up with a strategic way to sort of fend them off.

C (10:14)

Absolutely. And there are smaller players coming for them as well. Temu opened a Korean language online shopping platform in 2023 and last year started staffing up operations in South Korea and then domestically within South Korea. Naver, which is Korea's dominant Internet portal, it's pushing into online shopping and it already has this big customer base and they're going to leverage that to get their digital audience to shop from them.

B (10:38)

So can we talk about South Korean retail just more broadly for a second? Because I went to South Korea, I think it was two autumns ago and I went to a town called Busan and if those of you who've read a book called Pachinko, you'll recognize that the town from there and there was a reason I wanted to go there in particular beyond the cultural elements, but from commercial perspective, I just arrived in South Korea having moderated a conference for world department stores in in Europe and everyone kept saying what South Korea is doing, bringing technology to places, their department stores, going from virtual try on at home to then having smart mirrors in your, what's the word in the dressing room if you walk into a store to try things on. The way it is all being integrated into the real life experience was very differentiated. So I went to South Korea and I got to tell you, I was really impressed with some of the new tech enabled retail concepts I saw there. And then the other thing I'll just say on South Korea before we get to the data breach we're all waiting to hear about is South Korea is one example, and there aren't actually that many yet, of how a nation outside the US has been able to launch something in the consumer and the retail space that's really caught us consumers attentions and that's K Beauty, right? I don't know if you how much time you scrolling on Instagram, but it's very hard to avoid ads and reels being pushed out to you showing K beauty. It's a category that South Korea absolutely is totally transforming. And you know, that category also by the way is a very important one for Coupang. So lots going on in the South Korean market. It's really worth Tracking if you want to see where things are going next in consumer preferences. It's a fascinating market to look at and it's frankly undercovered. That's right.

C (12:17)

And it's November's earnings report. The head of Coupang mentioned that they're opening a vertical for cosmetics and also acknowledged that it's very competitive.

B (12:26)

Yeah, and by the way, Amazon's done the same thing. Also very competitive here in the United States. Let's get to the top this. Let's get to the juicy stuff. Right.

C (12:34)

There is some international intrigue possibly at play here. There's the data breach that, that Coupang is still working through. Reports are that a former employee of the company who worked as a software developer for authentication services had left a year earlier, so he doesn't work at the company anymore. Used his login credentials to get unfettered access to the personal information of coupon users. So this started back in June 24 last summer. The company apparently didn't notice for months until a customer flagged the issue. And that'll come up in a moment. Then in November, the data breach was formally announced by the company, saying that it had potentially affected the 33 million customer accounts.

B (13:12)

How do you not notice, how do you not notice a data breach of this size for months? For months. I'm really curious, actually. Don't. What the customer experienced. That was ultimately was the smoke that.

C (13:24)

I couldn't find it, but it was interesting. What was that? Red flag.

B (13:26)

Yeah. It's just fascinating. The other piece of this here is when it comes to cybersecurity, we so often think of these sort of hit and figures, cloaked figures, right. Lurking in the dark, trying to tap in using clever hacking. And the truth is the vast majority of cyber security attacks do come often. You know, corporate ones often come from employees who've left disgruntled employees credentials, the credentials. So this really is a case study in how it unfortunately all too often happens. Now, at the time the management caught it and then ultimately disclosed it, they called it a quote, data exposure. But we would really want to shine a light on what that means in South Korea when you're as big of a company as Coupang is, that number of customers, the 33 million affected represents more than 90% of South Korea's working age population. That's an unbelievable coverage rate. So unsurprisingly, Korean regulators took issue with this and then the company upgraded the incident, stopped calling it mere data exposure and finally acknowledged that was a quote leak. The CEO of South Korea operations had to resign and local police raided the company's office in Seoul.

C (14:37)

And this is a theme that we've been seeing in South Korea. Last year, two of the country's biggest telecom companies, including its largest mobile operator, SK Telecom, reported major data breaches. And as a result of all this, in December, South Korean President Lee Jae Myung said it was, quote, astonishing that Coupon did not detect the breach itself for months and called for increased penalties on data breaches, saying that the coupon incident had served as a wake up call for the country.

B (15:03)

Well, on December 26th, Coupon announced an internal investigation revealed that the former employee had retained information on 3,000 customers. And they wanted to say only 3,000.

C (15:14)

Right.

B (15:15)

But that's still meaningful. And the stock responded very favorably to that, popping up 9%. Well, the story's going on, but here is the piece that when it comes to the sort of the lead, the espionage piece of it, it's the nationality of the leaker that's caught everybody's eye, right?

C (15:31)

In a Wall Street Journal article I read, the suspected lead leaker is believed to be a Chinese national who has since moved back to China and is now on the lam. They cannot find this former employee. There's multiple government investigations still ongoing in South Korea. And on December 29, Coupang founder Kim Baum, who we talked about, apologized and pledged to expedite $1.2 billion in compensation to account holders.

B (15:55)

I was trying to do that math. $1.2 billion in compensation to, let's call it the full 33 million customer account. That's actually a pretty meaningful piece of compensation that's going to make its way to account holders, assuming all of that cash gets dispensed. Well, let's just talk about what the market thinks of this one. That last week Deutsche bank upgraded Coupang to a buy rating. That's despite reducing its price target to 25 bucks. Shares down 30% over the last three months. 13 out of 16 analysts that cover it have it at a buy. They're basically saying they think it's oversold. Shares have been down amid broader sell offs. Geopolitically driven, you know, a little bit of jitters when it comes to tech trade driven. But we're so grateful to Alejandro for flagging this one because it is so important, so interesting to us, frankly, to get the opportunity to talk about a company again. It's listed here in the United States. So certainly when it comes to stock, it's in our own backyards. But these, you know, South Korea is one of the biggest economies in the world. It is a major player in the geopolitical space. When you take a look at what's going on globally, we have got the rise of the middle class in nations across Asia and across the Middle East. We don't always talk about here in the United States. But these are going to be powerful consumers. They like American products. And so looking at a company like Coupang to try and get a sense for how the global consumer is doing is actually a pretty good way a one lens to try and look at what's going on outside our own domestic domain. Really enjoyed talking about that one. Thank you, Alejandro, again for the question. Let's take a quick break and when we come back, Lululemon's new Get Low collection is sending its stock lower. We take a look at the company's response. Producer JOHN I want to set you up.

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B (18:51)

It's 4pm on the east Coast. There it is, the closing bell. The market's wrapping up for today. We don't have a ticker tape so let's throw it over to our human ticker.

C (18:58)

Our producer John The S&P 500 was down 2%. The Nasdaq finished down nearly 2 1/2%. And the Dow was down 1 1/4 of a percent. Some market headlines. OpenAI sales numbers are out. Annualized revenue grew from $2 billion in 2023 to more than $20 billion in 2025.

B (19:18)

So OpenAI, of course, not a public company, at least not yet. There have been some chatters about potentially it going public at some point over the next year or so, but it is the company at the very epicenter of concerns about circular deals in AI. Just a quick jolting a memory on that. That's the likes of Nvidia investing billions of dollars in OpenAI, which in turn has taken equity in the likes of AMD and the money going from investor and all the way back again in terms of product orders. Well, I remember Sam Altman, OpenAI's CEO, being interviewed on CNBC at the time. Do you remember this, John? That the relationship, the partnership with Disney had just been announced when it came to imagery. And he was asked I remember this by David Faber, who's a journalist at CNBC, whether OpenAI should disclose more of its financials and more frequently, just given the sheer scale of its importance now and its importance to public companies. And so here we got over the weekend the release of its latest annual revenue numbers. And in that release, OpenAI CFO who's become the voice of the financials, Sarah Fryer, said that for 2026, the company will now prioritize what she called practical adoption, particularly in health science and enterprise. Just one person's view, practical adoption, another way of saying we need to focus on enterprise because that's where anthropic is doing really, really well. That's just one person's view.

C (20:40)

Right, exactly. In another revenue source, a few days earlier, OpenAI announced it will start testing ads in its free and GO tiers of ChatGPT in the US as soon as within a few weeks. No more free lunch when looking up a brownie recipe, which I did on that service over the weekend.

B (20:55)

But OpenAI has inked more than $1.4 trillion of infrastructure deals dominated the headlines in 2025. It's had in terms of the ability to fund that, the inflow of cash from corporate investments, as we said, from the likes of Nvidia, also from massive venture firms like SoftBank. It pulled in that $20 billion of revenue last year, as that release showed. But this ad push really highlights the need for OpenAI to find new sources of income and to fund those infrastructure commitments. And I think this has been looked at by the market as a sort of a mission that they need to try figure out something to do to fund that pretty dramatically.

C (21:31)

And today, shares of Lululemon dropped five and a half percent after the clothing retailer removed a new line of training apparel from its website. Just days after its debut, with some customers complaining that the leggings are too thin.

B (21:44)

Okay, I have a lot of perspectives on this, John. So the collection that we're talking about is called the Get Low Collection, which reminds me of the song. First of all, I don't understand that name. I don't understand that name. Now, the Get Low collection does remain available in stores, but it has been pulled from online distribution while the company collects customer feedback. So Lululemon, we've talked about it a lot. The founder has said that Lululemon has lost its cool factor. I got to tell you, it's opened up a new store in my neighborhood and I popped in and I really want to be excited by what I saw. And I like Lululemon. I'm just going to say this. I remember getting my first pair of Lululemon leggings.

C (22:24)

It was the chic.

B (22:25)

It was the chic. And I felt like I'd arrived in the world of these, you know, endlessly glamorous looking people who go work out in a way that I don't work out. When I go work out, I emerge completely disheveled. No one should come near me, right? And that's how I work out. But people in Lululemon's used to be able to swan in, you know, and sort of waft up onto their effortless, effortlessly onto their treadmill and just very elegantly run and then waft back as though floating on a cloud and emerge, usually from an equinox in their Lululemon outfit, looking utterly like they have just stepped out, you know, of a Runway show. That, to me, was what Lululemon invoked. And I went into this local store just really last week, and it was just really lame. I mean, there's no other way to it. It was just really layout, just a really bland layout. Really bland merchandise, totally uninspiring. And it finally hit me. This is what the founder's been talking about. It has lost its cool.

C (23:21)

Lost its cool. And on Reddit, there was talk. If you're talking about what it's called, the get Low, there were people posting that in the new pants, as I call them. You can't get low because they had a photo of people trying to do squats.

B (23:34)

Too restrictive.

C (23:35)

Doesn't work.

B (23:35)

Doesn't work. Oh, my goodness. Well, Lululemon is trying to regain its foothold in Athleisure. You may also remember that an activist took a big stake in Lululem, already throwing out a name for a potential CEO replacement. The board is trying to find somebody to take that seat. Shares down 46% over the last year. This is reminiscent of 2013 when Lulu recalled a line of yoga pants that were similarly classified by customers as being see through. So they've, they've, they, this isn't their first rodeo. Now also in terms of working out, we are tying up the laces on our running shoes because unbelievably, I can't believe it's here already. Earnings season on our doorstep. We've got Netflix reporting pretty much right now, as well as United Airlines. And later this week we'll see PNG, that's Procter Gamble and JNJ for consumer staples and then of course, Oilfield Services. Now, Venezuela is going to be a major source of conversation when those earnings come out. We're going to be watching very closely. That's it for today's Brew Markets Daily.

C (24:34)

Brew Markets Daily is hosted by Anne Barry and produced by John Curto, Tarkat Velatif and Emily Millard. Our technical director is Uchena Waugu. Jim Orzo is our audio engineer. The president of Morning Brew, Inc. Is Devin Emery. If you have any feedback or company you'd like us to COVID leave a comment or send an email to brewmarketshoworningbrew.com.

B (24:51)

Wake up tomorrow with the Morning Brew newsletter and tune in to Neil and Toby on Morning Brew Daily. We'll see you back here tomorrow, same time, same place.