The 2023 Fortune 500 list, ranking U.S.-based companies by revenue, features a surprising newcomer at No. 195: Coupang, an e-commerce giant that conducts most of its business in South Korea.

Coupang’s landing on the Fortune 500 for the first time this year is partly the result of its moving headquarters from Seoul to Seattle in 2022, thus qualifying it as a U.S. company for the purposes of Fortune’s ranking despite its having no U.S. customers. By Fortune’s reckoning, Coupang is one of two companies with minimal U.S. business; the other is Yum China, the Texas-based fast food operator that runs KFC, Taco Bell, and Pizza Hut in China.

Despite not serving U.S. customers, Coupang sees itself as a U.S. company. “Our founder [Bom Kim] is a U.S. citizen, and started the company in the U.S.,” says Harold Rogers, the company’s chief administrative officer. Coupang is incorporated in Delaware, its shares trade on the New York Stock Exchange, and it has offices and fulfillment centers in several countries, including the U.S.

Still, Coupang also needed robust revenue to secure a spot on the Fortune 500. And despite its limited geographic footprint—it only does business in South Korea, Taiwan, and, until recently, Japan—it generated $20.6 billion in revenue last year and cracked the Fortune 200, a testament to its dominance in the few markets it serves.

Coupang’s debut on the Fortune 500 isn’t its only milestone of late. Last November, the company reported its first quarterly net profit after years of losses, a feat it attributes to the network of warehouses and drivers it built from scratch. The firm has reported profits in every quarter since then, a streak that has helped Coupang combat its recent reputation as a victim of IPO overhype.

Coupang stock slump

Since its founding over a decade ago, Coupang has managed to be both a darling of the tech sector and poster child of disappointing post-IPO performance.

CEO Bom Kim founded Coupang, incorporating it in Delaware in 2010, after dropping out of Harvard Business School. Returning to Seoul, Kim set up the business as a Groupon-style service, before quickly pivoting to digital retail. The company grew to become one of South Korea’s key e-commerce companies, competing with giants like South Korea–based Naver. The firm attracted backers such as Stanley Druckenmiller and Bill Ackman, as well as SoftBank’s Vision Fund. Before Coupang’s IPO in 2021, SoftBank owned over a third of the company.

The firm’s boosters sold Coupang as the next “Amazon of Asia.” The startup lured users with its extreme convenience; customers can order goods as late as midnight and still have them delivered before seven the next morning. Users can also return goods easily, leaving packages on their doorstep for delivery drivers to retrieve.

Investors were attracted as well to Coupang’s presence in the wealthy, developed economy of South Korea and its digitally connected consumers. In its prospectus, Coupang projected the country’s retail market would grow to nearly $540 billion by 2024, citing data from market research firm Euromonitor.

“It is Amazon with a UPS attached to it; with DoorDash, with Instacart, with a little dash of Netflix, and that is all integrated on this technology platform with an extreme degree of customer-centricity,” said SoftBank’s Lydia Jett, then one of Coupang’s board members, before the company’s IPO in March 2021.

The IPO was a bonanza. Coupang raised $4.6 billion, and shares opened 81% above their offer price, at one point valuing the company at more than $100 billion on its first day of trading.

The rally was short-lived. Coupang’s share price declined steadily over the following year, as investors worried about the company’s giant losses amid a broader collapse in tech stocks. Other bad news included labor protests and a deadly—and expensive—fire at one of Coupang’s warehouses. By May 2022, shares had fallen to just $9.35, 73% below the offer price of $35 and even further off its trading debut of $63.50.

Shares have recovered from those lows, albeit slowly; they have risen almost 60% from the lowest point last year, hitting over $15 as of June 1. Still, the company’s current market cap of $27.8 billion is roughly a quarter of the valuation it hit on its first trading day.

Path to profitability

Luckily for Coupang, the Fortune 500 doesn’t take into account seesawing stock prices. Rather, the list ranks companies by the revenue they generate.

According to the company’s annual report, 97% of Coupang’s 2022 revenue of $20.6 billion came from its “product commerce” division, which includes retail and grocery delivery services. The e-commerce firm earns sales from its own stock of goods, and pockets a fee from third-party sellers, similar to Amazon. Coupang’s newer initiatives, like meal delivery service Coupang Eats and streaming service Coupang Play, generated the remainder of its 2022 revenue.

And Coupang’s revenue is growing. The company reported $5.8 billion in revenue for the most recent quarter, up 13% year on year.

Coupang recorded a net loss of $92 million in 2022 overall, but the company has been in the black for the past three quarters. Most recently, it earned $91 million in net income in the January to March 2023 period.

Coupang attributes this newfound profitability to squeezing greater efficiencies from its proprietary delivery infrastructure, which it spent years building from the ground up.

“We had to build that last mile ourselves, which meant a lot of upfront investment,” says Rogers. The company had blamed previous losses on its continued investment in delivery infrastructure. Unlike Amazon or Naver, which rely on third parties like UPS and FedEx to deliver goods, Coupang uses its own fleet of trucks and drivers to get orders to customers.

“The way we’ve built that end-to-end logistics network, we can do things that no other company, at scale, can do,” Rogers says.

Coupang has invested heavily in robotics. Automated vehicles move through the company’s fulfillment centers to deliver 1,000-kilogram packages to sorters. The company told Bloomberg in February that automation had cut the workload for its human workers by 65%.

The company is trying to diversify its business, but not every initiative has panned out. The company’s streaming video service faces stiff competition from foreign giants like Disney and Netflix, both of which are expanding their Korean-language offerings. Coupang’s “developing offerings” segment, which includes streaming video and meal delivery, reported a $47 million loss before interest, taxes, depreciation, and amortization last quarter.

The company also ended its two-year trial run in Japan in March, saying it wanted to focus on the greater potential for growth in existing markets. “We started both Japan and Taiwan as these small experiments to see which market would gain traction,” Rogers says. “We saw a much bigger opportunity in Taiwan.”

Overvalued?

Some analysts are impressed with Coupang’s recent performance, noting that its sales growth is outperforming both the Korean e-commerce market and the country’s retail market in general.

Suh Bokyung, a Korea analyst for Bernstein, meanwhile, says Coupang’s stock is too high even though it remains well below its post-IPO peak. He’s skeptical that Coupang can record more revenue growth, given South Korea’s well-developed and highly penetrated e-commerce market and Coupang’s limited business elsewhere. He’s especially discouraged by Coupang’s gross profit margins, which have essentially flatlined since reaching 24.2% last November.

Suh stresses that his judgment of Coupang is based purely on its valuation, and not the company as a business.

“I like the company. I like the team,” he says. “They understand the e-commerce business.”

“It’s just overvalued,” he says.