Coupang stock stuck in a bear market after breach: will it rebound?

Coupang stock price has suffered a big reversal in the past few months as a major data breach affected its outlook. CPNG plunged to a low of $25.80, its lowest point since May and ~25% from its highest point this year. So, will the stock rebound as it nears a death cross?

Coupang stock price technicals point to more downside

The daily timeframe chart reveals that the CPNG stock price has come under pressure in the past few months. It has plunged from a high of $34 in October to $25.85 today. 

The stock has moved below the 50% Fibonacci Retracement level. It has also dropped below the 50-day and 200-day moving averages, with the spread between the two narrowing. 

It has also moved below the important support level at $26.15, its lowest point in November. Most notably, it sits below the Ichimoku cloud and the Supertrend indicators.

Therefore, the most likely scenario is where the Coupang share price continues falling, with the next key level to watch being the 61.8% retracement point at $24.7. 

Why Coupang share price is crashing

Coupang, a company known as South Korea’s Amazon, has plunged because of a major hack that may cost it billions of dollars over time. It has also cost it its CEO, who resigned earlier this week.

The company has said that the hack compromised over 33 million active users, with the hackers gaining crucial information. Some of the stolen data are on their names, email and phone numbers, and shipping addresses. 

While customers’ data on credit and debit cards was safe, the exposed information can be used for phishing and other crimes. 

The most notable part of the crisis is how Coupang, a company valued at over $47 billion, did not detect the hack for over five months.  

Therefore, there is a likelihood that the company will receive a big fine from regulators. For example, SK Telecom was fined $97 million earlier this year over a leak that exposed 25 million customers.

South Korean lawmakers have suggested that the company should pay ~Won 1.2 trillion ($814 million), under a law that punishes firms that don’t adequately protect customer data. These firms are fined ~3% of their annual revenues. 

Hack to hurt growth and profitability, but turnaround is possible

The most recent results showed that Coupang’s business continued its grow in the last quarter. Its revenue rose by 18% to $9.3 billion, while its operating and net income rose to $162 million and $53 million, respectively. 

The company continued to repurchase its stock, a move that it hopes will lead to higher earnings per share (EPS) in the long term. 

However, the main issues is that the recent hack may lead to short-term volatility that will hurt its growth. It may also push the company to boost spending on cybersecurity, hurting its profitability. 

In the long-term, however, the company will execute a turnaround  as ther firms have done before. For example, Equifax, a major credit rating company, suffered a hack that exposed data of over 147 million users. A breach on Mariott exposed over 500 million users. 

Other companies that have suffered these breaches are Uber, Capital One, and Colonial Pipeline. Historically, these companies have all bounced back from these serious hacks. 

Therefore, while the Coupang stock price sell-off may continue, there is a likelihood that it will bounce back eventually. 

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