South Korean e-commerce giant Coupang (CPNG) scored a big win as a U.S. District Judge dismissed a lawsuit filed against the company, accusing it of defrauding shareholders during and after its initial public offering (IPO) in March 2021. Notably, Coupang, often called the “Amazon [$AMZN] of South Korea,” raised $4.6 billion through its IPO, the largest by a foreign company on Wall Street since Chinese e-commerce giant Alibaba (BABA) went public in September 2014.
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IPO Lawsuit Against Coupang Dismissed
U.S. District Judge Vernon Broderick in Manhattan dismissed the lawsuit led by several New York City public pension funds with prejudice, implying that it cannot be brought again.
Broderick stated that the plaintiffs failed to prove that Coupang and its executives defrauded them and made materially misleading statements and omissions. Also, the plaintiffs brought some claims too late.
Shareholders had accused Coupang of hiding unsafe working conditions at its warehouses, having employees write favorable product reviews about its private-label brands, and forcing suppliers to boost prices on rival platforms for products it automatically price-matched. They also highlighted that CPNG stock price fell by over 50% within a year of the IPO, amid multiple allegations, investigations by South Korea’s Fair Trade Commission, and a fire at a large fulfillment center.
Broderick ruled that many statements made by the company about working conditions were too broad or “aspirational” to be misleading. He added that Coupang disclosed that its employees were writing reviews.
Is CPNG a Good Stock to Buy?
With seven Buys and two Holds, Wall Street has a Strong Buy consensus rating on Coupang stock. The average CPNG stock price target of $34.25 indicates 6.6% upside potential from current levels. CPNG stock has surged 46% year-to-date.
