Coupang (CPNG) risk factors, FY2024 10-K

Risks Related to Our Operations, Limited Operating History and Evolving Business

1. 01We may experience significant fluctuations in our results of operations
2. 02Our limited operating history and evolving business make it difficult to evaluate our future prospects, including future revenue growth rate, as well as the risks and challenges we may encounter
3. 03If we fail to address the risks and uncertainties that we face, including those associated with the challenges listed above and those described elsewhere in this “Risk Factors” section, our business, financial condition, and results of operations would be adversely affected
4. 04We have had a history of net losses prior to our most recent fiscal years, we may incur losses in the future, and we cannot ascertain whether we will maintain profitability in future periods, which would materially and adversely affect our business, financial condition, results of operations, and prospects

Risks Related to Our Business and Our Industry

1. 05If we are unable to successfully implement some or all of our major strategic initiatives in a timely manner, our ability to maintain and improve our market position may be materially and adversely affected
2. 06The acquisition of Farfetch created incremental risk to our business, financial condition, and results of operations
3. 07If we fail to effectively manage our growth, our business, financial condition, and results of operations could be harmed
4. 08Our revenue depends on prompt and accurate payment processes. Our failure to grow our transaction-processing capabilities to accommodate the increasing number of transactions that must be billed on our apps and websites would materially harm our business and our ability to collect revenue
5. 09If we do not successfully operate and manage the expansion of our fulfillment and logistics infrastructure, our business, financial condition, and results of operations could be materially harmed
6. 10In addition, if we do not have sufficient fulfillment and logistics capacity, or we experience problems fulfilling and delivering orders in a timely manner, our customers may experience delays in receiving their purchases, which could harm our reputation and our relationship with our customers
7. 11We operate in a highly competitive industry and we may be unsuccessful in competing against current and future competitors, which could have a negative impact on the success of our business
8. 12We are dependent on the performance of certain members of management and other highly qualified and skilled personnel, and if we are unable to attract, retain, and motivate these and other well-qualified employees, our business could be harmed
9. 13Our culture has been critical to our success and if we cannot maintain this culture as we grow, our business could be harmed
10. 14Our expansion into new geographies and offerings and substantial increase in the number of our offerings may expose us to new and increased challenges and risks
11. 15Any harm to our brand or reputation may materially and adversely affect our business, financial condition, and results of operations
12. 16We are subject to risks associated with sourcing and manufacturing goods from countries outside of Korea
13. 17Our operations are also subject to the effects of international trade agreements and regulations, which may impose requirements that adversely affect our business, such as setting quotas on products that may be imported from a particular country
14. 18If we fail to retain existing suppliers or merchants or to add new suppliers or merchants, or if our existing suppliers or merchants fail to supply high-quality and compliant merchandise in a timely manner, our business, financial condition, and results of operations will be materially and adversely affected
15. 19Efforts to increase advertising revenue may impact our sales or results of operations
16. 20Inventory risks may materially and adversely affect our results of operations
17. 21The seasonality of our business affects our quarterly results and places an increased strain on our operations
18. 22We may also experience increases in our fulfillment and logistics costs due to promotions, split-shipments, changes to our fulfillment and logistics network, and other arrangements necessary to ensure timely delivery during times of high order volume
19. 23We may expand our operations and offerings into new geographies, which would present new challenges and which may prove unsuccessful and materially and adversely affect our business
20. 24Acquisitions, strategic investments, partnerships, or alliances could be difficult to identify, pose integration challenges, divert the attention of management, disrupt our business, dilute stockholder value, and materially and adversely affect our business, financial condition, and results of operations
21. 25Our business depends on the continued growth of online commerce and the increased acceptance of online transactions by potential customers
22. 26If the mobile solutions available to our merchants and customers are not effective, the use of our apps, websites, and marketplaces could decline
23. 27As new mobile devices and operating systems are released, we may encounter problems in developing or supporting applications for them. In addition, supporting new devices and mobile device operating systems may require substantial time and resources
24. 28Failure to deal effectively with fraudulent activities on our apps or websites would increase our fraud losses and harm our business and could severely diminish merchant and customer confidence in and use of our services
25. 29We rely on Coupang Pay to conduct a substantial amount of the payment processing across our business. If Coupang Pay’s services were limited, restricted, curtailed, or degraded in any way, or become unavailable to us or our customers for any reason, our business may be adversely affected
26. 30Increases in food, energy, labor, and other costs could materially and adversely affect our results of operations
27. 31We rely on our merchants to provide a high quality experience to our customers
28. 32Changes to our customer satisfaction program could increase our expenses
29. 33Our business could be disrupted by catastrophic occurrences and similar events
30. 34Our business and operations could be adversely affected by health epidemics, impacting the geographies and communities in which we and our customers, suppliers, merchants, and advertisers operate
31. 35We may require additional capital to support the growth of our business, and this capital might not be available on acceptable terms, if at all
32. 36We face risks associated with our investment portfolio
33. 37Restrictions in our credit agreements could materially and adversely affect our operating flexibility
34. 38The requirements of being a public company may strain our resources, divert management’s attention, and affect our ability to attract and retain executive management and qualified board members

Risks Related to Doing Business in Korea

1. 39Coupang Corp.’s transactions with its subsidiaries and affiliates may be restricted under Korean fair trade regulations
2. 40Our Korean subsidiary, Coupang Corp., and a group of companies affiliated with it have been designated an affiliated group under Korean law, which would require that group of companies to make certain disclosures and implement additional corporate governance requirements
3. 41Coupang Corp. is subject to certain requirements and restrictions under Korean law that may, in certain circumstances, require it to act in a manner that may not be in our or our stockholders’ best interest
4. 42Coupang Corp.’s transactions with related parties are subject to close scrutiny by the Korean tax authorities, which may result in adverse tax consequences
5. 43A focus on regulating copyright and patent Infringement by the Korean government subjects us to extra scrutiny in our operations and could subject us to sanctions, fines, or other penalties, which could adversely affect our business and operations in Korea
6. 44Our business may be adversely affected by developments that negatively impact the Korean economy and uncertainties in economic conditions that impact spending patterns of our customers in Korea
7. 45Fluctuations in exchange rates could result in foreign currency exchange losses to us
8. 46Tensions with North Korea could have an adverse effect on our business, financial condition, results of operations, and the price per share of our Class A common stock
9. 47New Korean legislative proposals may expose our business to additional risks from litigation, regulation, and government investigations
10. 48Additional enacted or proposed regulations include numerous consumer related provisions in the online shopping industry. Implementation of any of these regulations could have an adverse effect on our business
11. 49Korean government mandates, policies, negotiations, and orders may have a negative impact on our business, financial conditions, and results of operations
12. 50As Coupang Corp., our wholly-owned Korean subsidiary, is incorporated in Korea, it may be more difficult to enforce judgments obtained in courts outside Korea

Risks Related to Labor and Employment

1. 51If we are unable to recruit, train, and retain qualified personnel or sufficient workforce while controlling our labor costs, our business may be materially and adversely affected
2. 52We are subject to fair trade, labor, employment, and workplace health and safety laws and regulations in Korea and other jurisdictions, which continue to evolve and have and will continue to affect some of our operations and our financial performance
3. 53We have been and will continue to be subject to inspections, investigations, disputes, and litigation relating to these labor and employment laws and regulations
4. 54Union activities could affect our business
5. 55Our business could be adversely affected from an accident, health and safety incident, or workforce disruption

Risks Related to Laws, Regulation, and Intellectual Property

1. 56The nature of our food delivery services, including Coupang Eats and Rocket Fresh, could subject us to potential liability for foodborne illnesses experienced by our customers
2. 57The nature of our delivery logistics, including those related to our own delivery services and our services that use independent delivery partners, exposes us to potential liability and expenses for legal claims that could adversely affect our business, financial condition, and results of operations
3. 58Failure by our suppliers or merchants to comply with product safety, intellectual property, or other laws may subject us to liability, damage our reputation and brand, and harm our business
4. 59Similarly, failure of our merchants to provide merchandise that complies with all applicable laws could result in liability relating to our marketplace, damage to our reputation and brand, increased enforcement activity or litigation, and increased legal costs
5. 60Government regulation of the Internet, online retail, and mobile commerce is evolving, and unfavorable changes or failure by us to comply with these regulations could adversely affect our business, financial condition, and results of operations
6. 61Any failure to protect our apps, websites, networks, and systems against security breaches or otherwise protect our and our customers’ and business partners’ confidential information could damage our reputation and brand and adversely affect our business, financial condition, and results of operations
7. 62We are subject to claims, litigation, governmental audits, inspections, investigations, and various legal proceedings, and face potential liability, expenses for legal claims, and harm to our business
8. 63Failure to comply with anti-corruption and anti-money laundering laws, including the FCPA and similar laws, could subject us to penalties and other adverse consequences
9. 64We are subject to governmental economic and trade sanctions laws and regulations and violations of such laws could subject us to liabilities, penalties, and other potential consequences
10. 65A failure to comply with current laws, rules and regulations or changes to such laws, rules, and regulations and other legal uncertainties may adversely affect our business, financial performance, results of operations, or business growth
11. 66Our results of operations and financial condition may be adversely affected by governmental regulation and associated regulatory costs related to the environment and climate change
12. 67We may not be able to adequately protect our intellectual property rights or may be accused of infringing intellectual property rights of third parties
13. 68Some of our software and systems contain open source software, which may pose particular risks to our proprietary software and solutions
14. 69The use of AI, machine learning, and related technologies in our business present risks and challenges that could adversely affect us

Risks Related to Taxes

1. 70Changes in the tax treatment of companies engaged in online retail may adversely affect the commercial use of our apps and websites and our financial results
2. 71We may experience fluctuations in our tax obligations and effective tax rate, which could materially and adversely affect our results of operations
3. 72Our ability to utilize net operating loss carryforwards may be limited
4. 73Certain of these amounts are subject to annual limitations under applicable tax law. If not utilized, a portion of these losses will begin to expire in 2025

Risks Related to Ownership of Our Class A Common Stock

1. 74The dual class structure of our common stock has the effect of concentrating voting control with Bom Kim, who beneficially owns all of our Class B common stock representing in the aggregate 74.4% of the voting power of our capital stock as of December 31, 2024
2. 75We cannot predict the effect our dual class structure may have on the price per share of our Class A common stock
3. 76investment vehicles that attempt to passively track those indices would not invest in our Class A common stock. Exclusion from indices, could make our Class A common stock less attractive to investors and, as a result, the market price of our Class A common stock could be adversely affected
4. 77The market price of shares of our Class A common stock may be volatile, which could cause the value of your investment to decline
5. 78Sales of our Class A common stock in the public market could cause the price per share of our Class A common stock to decline
6. 79public market upon issuance, subject to compliance with applicable securities laws, applicable vesting requirements, and other restrictions provided under the terms of the applicable plan and/or the award agreements entered into with participants