Coupang Confronts Investor Lawsuit Over Cybersecurity Breach Allegations

What happened

National shareholder rights firm Hagens Berman has notified Coupang investors of a pending class action lawsuit with a lead plaintiff deadline in February 2026. The lawsuit alleges that Coupang misled investors by misrepresenting its cybersecurity protocols and concealing a data breach where a former employee accessed sensitive customer data. DeepValue's master report had previously identified cybersecurity and privacy as key risks, underscoring that this vulnerability was already on the radar. Despite these allegations, Coupang's core Product Commerce segment shows strong operational performance with solid gross profit and free cash flow generation. However, this legal challenge contrasts with the company's reported metrics and could signal deeper governance issues.

Implication

The class action lawsuit introduces significant uncertainty, potentially leading to substantial financial penalties and legal costs that may erode Coupang's cash reserves. This could delay or reduce the effectiveness of the $1 billion share repurchase program mentioned in the DeepValue report, impacting capital allocation flexibility. Customer trust and brand reputation are at risk, which might affect Active Customer growth and revenue per customer in the Product Commerce segment. Regulatory scrutiny in Korea could intensify, exacerbating existing operational risks like FX volatility and competition. Consequently, while the core business remains robust, the legal overhang may tilt the risk/reward balance negatively, aligning with the DeepValue report's cautious HOLD stance but adding a new layer of downside risk.

Thesis delta

The investment thesis now incorporates an explicit legal overhang from the cybersecurity lawsuit, which was previously noted as a risk but not actively litigated. This shift heightens the potential for financial and reputational damage, suggesting that the HOLD rating may need to be reassessed if the lawsuit progresses unfavorably, though core operational strengths provide some buffer.