| Snowflake Score | |
|---|---|
| Valuation | 3/6 |
| Future Growth | 4/6 |
| Past Performance | 0/6 |
| Financial Health | 4/6 |
| Dividends | 0/6 |
CPNG Stock Overview
Coupang, Inc. owns and operates in e-commerce business through its mobile applications and Internet websites primarily in South Korea.
Coupang Competitors
Price History & Performance
| Historical stock prices | |
|---|---|
| Current Share Price | US$19.23 |
| 52 Week High | US$39.86 |
| 52 Week Low | US$8.98 |
| Beta | 0 |
| 1 Month Change | 18.70% |
| 3 Month Change | 59.72% |
| 1 Year Change | -50.44% |
| 3 Year Change | n/a |
| 5 Year Change | n/a |
| Change since IPO | -60.95% |
Recent News & Updates
Coupang: The Risk/Reward Has Now Become Attractive
Coupang is the leading e-commerce company in South Korea. The company operates a consumer platform and a countrywide logistic and delivery network that enables the company to offer industry-leading standards in delivery time and frequency. Coupang has seen strong growth in the past and now claims a market share in South Korea of approximately 20% in e-commerce. I argue that the company is poised to eventually claim a monopolistic position if government regulation does not interfere with Coupang’s expansion. I initiate coverage on Coupang with a Buy recommendation and a $19.37/share target price. Coupang (CPNG) stock is down more than 55% YTD. While I feel the pain of shareholders who bought the stock early, new investors might appreciate the attractive valuation as a buying opportunity and accumulate a position. Coupang is a quality company, with attractive business opportunities and growth potential in South Korea. In my opinion, Coupang is poised to ultimately become the country's dominating e-commerce player, likely to increase market share from 20% as of 2022 to more than 60% by 2030. I assign a Buy recommendation to Coupang stock and calculate a target price of $19.37/share, which indicates approximately 30% upside. About Coupang Coupang is the leading e-commerce company in South Korea. The company operates a consumer platform and a countrywide logistic and delivery network that enables the company to offer industry-leading standards in delivery time and frequency. That said, Coupang offers same-day, next-day, and multiple-times-a-day delivery services which give the company a strong non-price-sensitive advantage over competitors. Coupang also offers Rocket WOW for less than $3 per user, which is a subscription service similar to Amazon's Prime (AMZN). Coupang's Opportunity Coupang has seen strong growth in the past and now claims a market share in South Korea of approximately 20% in e-commerce. And I argue that the company is poised to eventually claim a monopolistic position, if government regulation does not interfere with Coupang's expansion. My argument is based on the fact that Coupang's leading logistic network and thereby delivery system is hard to replicate and provides competitive advantages of such scale that consumers will eventually switch to the leading service provider (See Amazon's success based on scale and network effects). Outside of South Korea, I personally do not see much potential for Coupang as giants such as JD (JD), Alibaba (BABA), Sea (SE), and Amazon are much better positioned to invest and compete. But Coupang's domestic >$100 billion e-commerce market is still considerable and packed with growth opportunities. Specifically, I see four verticals where Coupang could find opportunities: First, while the e-commerce penetration in South Korea is already very high, the market is still fragmented. As mentioned in the previous section, Coupang's market share as of early 2022 is only approximately 20%. As I expect the company to claim a 60% market share by 2030 latest, the company's business operations are poised to triple. Secondly, Coupang might find opportunities in new business opportunities such as food and grocery delivery. This is still an early-stage market in South Korea and could offer the company an attractive growth vertical that is strongly supported by Coupang's strong logistic network and brand recognition. Finally, Coupang could push to increase average spending per customer by expanding into high value/high margin verticals such as fashion, cosmetics or electronics. Fundamental Performance Coupang is not profitable. But profitability doesn't appear to be a short-term objective for the company. In 2021, Coupang generated $18.4 million of revenues and recorded a net loss of $1.5 billion (-8.4 margin). The loss, however, was mainly driven by high investment spending as the company is still heavily investing in logistic infrastructure, especially for grocery delivery. That said, cash from operations was much better than net income, although negative too, at -$410 million. Capital expenditures were $673 million. Coupang's balance sheet appears healthy and able to support further business growth. As of Q1 2022, Coupang holds $3.4 million of cash and cash equivalents and $2.4 billion of total debt. For reference, Coupang currently trades at a $20.3 billion market capitalization. How analysts see Coupang Going forward, analyst consensus estimates Coupang's revenues for 2022, 2023, 2024 and 2025 are $21.77 billion, $26.46 billion, $31.66 billion, and $36.81 billion, which implies a CAGR of >25%. Respectively for the same periods, EPS is estimated at -$0.48, -$0.20, $0.15, and $1.02 (Source: Bloomberg Terminal, June 2022). If analyst consensus, which seems reasonable to me, is correct, Coupang shares would now effectively be trading at a 2025 forward P/E of approximately x11. Moreover, the average analyst price target for Coupang implies an upside of more than 100%, based on a $23.45/share target price. Seeking Alpha Residual Earnings Valuation If analyst estimates are correct, what could be a fair valuation for Coupang stock? To support my value thesis, I would like to quickly present a valuation based on the residual earnings framework. Arguably, my assumptions are simple and conservative: I base my EPS estimates on the analyst consensus estimates until 2025. I find these are very reasonable, so I don't see a reason to challenge them. After 2025, I extrapolate business activities into infinity (terminal value). I apply a conservative 9% WACC. For the terminal growth rate, I apply expected nominal GDP growth at 3.5% plus one percentage point to reflect a slight growth premium. Based on the above assumptions, my calculation returns a base-case target price for Coupang of $19.37/share, which indicates an approximate 30% undervaluation. Investors might have different assumptions with regard to Coupang's required return and terminal business growth. Thus, I also enclose a sensitivity table to test varying assumptions. For reference, red cells imply an overvaluation as compared to the current market price, and green cells imply an undervaluation. Analyst Consensus; Author's calculation Analyst Consensus; Author's calculation Risks I would like to highlight the following downside risks that could cause Coupang stock to materially differ from my price target: First, a worsening macro-environment including inflation and supply-chain challenges could negatively impact Coupang's customer base. If challenges turn out to be more severe and/or last longer than expected, the company's financial outlook should be adjusted accordingly.
Coupang: Making A Comeback After Analysts Upgrade The Stock
Coupang's stock is down 65% from its highs. For the stock to return to former highs, it would have to climb up more than 150%. It could be said that Coupang's stock has been left for dead. However, last week analysts have been turning to the stock and issued a bullish report. Coupang's revenue growth rates are rapidly slowing and leave much to be desired. That is a headline risk. All that being said, the core investment thesis will now be focused on its profitability profile. I rate the stock a buy. Investment Thesis Coupang (CPNG) has found some support last week. The stock got crushed to a pulp in the year post-IPO, but lately, analysts have turned a positive eye towards the stock highlighting its positive risk-reward. Coupang had previously declared that it would reach EBITDA profits in late 2022. However, as I previously argued in my bullish analysis, Coupang's core segment, its eCommerce and Fresh offerings, turned EBITDA positive in Q1, meaningfully ahead of schedule. There are two bearish considerations and one bullish aspect to this investment. Coupang's revenues are slowing down is the main headline risk. The other overhang is that Coupang is an eCommerce business with some side growth initiatives that are masking its profitability. That being said, management is very much aware of investors' concerns and has taken its foot off the pedal to focus instead on profitable growth. Revenue Growth Rates Slow Down Coupang revenue growth rates Here's the bear case. Coupang's growth rates are slowing. Not only is 22% paltry for a leading eCommerce player, but this marks a substantial deceleration over the previous 5 quarters. Then, to even further complicate matters, its financials are in USD. This means that its financials have around a further 10% headwind to contend with. Altogether, this is less than great. That being said, the fact that its growth rates have suddenly substantially slowed down, is the reason why the business has now pivoted towards focusing more intently on its underlying profitability. Coupang's Near-Term Prospects CPNG Q4 2021 presentation Coupang is a Korean eCommerce player. Coupang aims to be the fastest e-commerce delivery service in Korea. Coupang has two segments, Product Commerce and Developing Offerings. The Product Commerce segment accounts for more than 96% of the business' revenues. While it's Developing Offering, what used to be called Growth Initiatives holds Coupang Eats (a food delivery service), Video, and International and Fintech initiatives. As we'll touch on soon, Coupang's Developing Offering is masking the profitability of the underlying business. Now, turning back to its Product Commerce opportunity, Coupang estimates that its, [...] oldest active customers are spending on Coupang over 60% of their total estimated online spend today. If you think about the logistics infrastructure required to capture such a high proportion of active customers' online spending, this speaks to the moat around Coupang's operations. Getting this level of consumer wallet share isn't an easy feat. Or perhaps, more importantly, displacing this level of spending on Coupang won't be easy for competitors. Profitability Profile in Focus Before going further, we should keep in mind that Coupang carries approximately $2.5 billion of net cash. This is not a needle mover on the investment thesis. But when the business is burning cash flows, you need to be sure that the business has enough dry powder to come out the other side. And Coupang clearly does. What's more, as I alluded to in my previous article, at the surface level, Coupang is still unprofitable, with its EBITDA margins at negative 1.8%. However, the devil is in the detail. Coupang Q1 2022 results As you can see above, its core Product Commerce segment reported $2.9 million of EBITDA. This was a massive swing from the negative $69.3 million in the same period a year ago. Recent Analysts' Reports And this level of improvement was something that didn't go missing from Credit Suisse's upgrade on Friday. As you can see, both Credit Suisse and Morgan Stanley's reports point out the same things that I'm discussing here. Both houses note a ''bottom line turnaround'' story, with Morgan Stanley's analysts declaring'' [Coupang] narrows its focus on reaching consistent profitability''. This is essentially the same as I'm noting, just doing so more succinctly. Meanwhile, Credit Suisse put more emphasis on Coupang's Growth Initiatives being ''underappreciated by the market''. While I do not believe that is where the needle mover is likely to come from, it nevertheless does not detract from my own bullish analysis here. CPNG Stock Valuation - 1x Sales If we presume that Coupang continues to grow at 20% CAGR this year, this levels the stock priced at 1x sales.
Shareholder Returns
| CPNG | US Online Retail | US Market | |
|---|---|---|---|
| 7D | 11.2% | 5.0% | 1.0% |
| 1Y | -50.4% | -29.1% | -12.9% |
Return vs Industry: CPNG underperformed the US Online Retail industry which returned -29.1% over the past year.
Return vs Market: CPNG underperformed the US Market which returned -12.8% over the past year.
Price Volatility
| CPNG volatility | |
|---|---|
| CPNG Average Weekly Movement | 13.0% |
| Online Retail Industry Average Movement | 12.9% |
| Market Average Movement | 7.9% |
| 10% most volatile stocks in US Market | 17.1% |
| 10% least volatile stocks in US Market | 3.2% |
Stable Share Price: CPNG is more volatile than 75% of US stocks over the past 3 months, typically moving +/- 13% a week.
Volatility Over Time: CPNG's weekly volatility (13%) has been stable over the past year, but is still higher than 75% of US stocks.
About the Company
| Founded | Employees | CEO | Website |
|---|---|---|---|
| 2010 | 68,000 | Bom Suk Kim | https://www.coupang.com |
Coupang, Inc. owns and operates in e-commerce business through its mobile applications and Internet websites primarily in South Korea. It operates through two segments, Product Commerce and Growth Initiatives. The company sells various products and services in the categories of home goods and décor products, apparel, beauty products, fresh food and groceries, sporting goods, electronics, and everyday consumables, as well as travel, and restaurant order and delivery services.
Coupang Fundamentals Summary
| CPNG fundamental statistics | |
|---|---|
| Market Cap | US$33.89b |
| Earnings (TTM) | -US$1.46b |
| Revenue (TTM) | US$19.32b |
1.8x
P/S Ratio-23.3x
P/E RatioIs CPNG overvalued?
See Fair Value and valuation analysisEarnings & Revenue
| CPNG income statement (TTM) | |
|---|---|
| Revenue | US$19.32b |
| Cost of Revenue | US$15.90b |
| Gross Profit | US$3.42b |
| Other Expenses | US$4.88b |
| Earnings | -US$1.46b |
Last Reported Earnings
Mar 31, 2022
Next Earnings Date
Aug 10, 2022
| Earnings per share (EPS) | -0.83 |
| Gross Margin | 17.71% |
| Net Profit Margin | -7.54% |
| Debt/Equity Ratio | 39.9% |
How did CPNG perform over the long term?
See historical performance and comparisonValuation
Is CPNG undervalued compared to its fair value, analyst forecasts and its price relative to the market?
Valuation Score
3/6Valuation Score 3/6
Price-To-Sales vs Peers
Price-To-Sales vs Industry
Price-To-Sales vs Fair Ratio
Below Fair Value
Significantly Below Fair Value
Analyst Forecast
Key Valuation Metric
Which metric is best to use when looking at relative valuation for CPNG?
Other financial metrics that can be useful for relative valuation.
| What is CPNG's n/a Ratio? | |
|---|---|
| n/a Ratio | 0x |
| n/a | n/a |
| Market Cap | US$33.89b |
| Key Statistics | |
|---|---|
| Enterprise Value/Revenue | 1.7x |
| Enterprise Value/EBITDA | -35.7x |
| PEG Ratio | n/a |
Price to Sales Ratio vs Peers
How does CPNG's PS Ratio compare to its peers?
| CPNG PS Ratio vs Peers |
|---|
| Company | PS | Estimated Growth | Market Cap |
|---|---|---|---|
| Peer Average | 4x | ||
DASH DoorDash | 5.7x | 18.2% | US$31.9b |
EBAY eBay | 2.6x | 4.9% | US$26.0b |
MELI MercadoLibre | 5.8x | 22.4% | US$51.6b |
CHWY Chewy | 2x | 13.5% | US$18.7b |
CPNG Coupang | 1.8x | 16.6% | US$33.9b |
Price-To-Sales vs Peers: CPNG is good value based on its Price-To-Sales Ratio (1.8x) compared to the peer average (4x).
Price to Earnings Ratio vs Industry
How does CPNG's PE Ratio compare vs other companies in the US Online Retail Industry?
Price-To-Sales vs Industry: CPNG is expensive based on its Price-To-Sales Ratio (1.8x) compared to the US Online Retail industry average (0.8x)
Price to Sales Ratio vs Fair Ratio
What is CPNG's PS Ratio compared to its Fair PS Ratio? This is the expected PS Ratio taking into account the company's forecast earnings growth, profit margins and other risk factors.
| Fair Ratio | |
|---|---|
| Current PS Ratio | 1.8x |
| Fair PS Ratio | 1.5x |
Price-To-Sales vs Fair Ratio: CPNG is expensive based on its Price-To-Sales Ratio (1.8x) compared to the estimated Fair Price-To-Sales Ratio (1.5x).
Share Price vs Fair Value
What is the Fair Price of CPNG when looking at its future cash flows? For this estimate we use a Discounted Cash Flow model.
Below Fair Value: CPNG ($19.23) is trading below our estimate of fair value ($89.91)
Significantly Below Fair Value: CPNG is trading below fair value by more than 20%.
Analyst Price Targets
What is the analyst 12-month forecast and do we have any statistical confidence in the consensus price target?
Analyst Forecast: Target price is less than 20% higher than the current share price.
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Future Growth
How is Coupang forecast to perform in the next 1 to 3 years based on estimates from 11 analysts?
Future Growth Score
4/6Future Growth Score 4/6
Earnings vs Savings Rate
Earnings vs Market
High Growth Earnings
Revenue vs Market
High Growth Revenue
Future ROE
74.8%
Forecasted annual earnings growth
Earnings and Revenue Growth Forecasts
Analyst Future Growth Forecasts
Earnings vs Savings Rate: CPNG is forecast to become profitable over the next 3 years, which is considered faster growth than the savings rate (1.9%).
Earnings vs Market: CPNG is forecast to become profitable over the next 3 years, which is considered above average market growth.
High Growth Earnings: CPNG is expected to become profitable in the next 3 years.
Revenue vs Market: CPNG's revenue (16.6% per year) is forecast to grow faster than the US market (7.9% per year).
High Growth Revenue: CPNG's revenue (16.6% per year) is forecast to grow slower than 20% per year.
Earnings per Share Growth Forecasts
Future Return on Equity
Future ROE: CPNG's Return on Equity is forecast to be low in 3 years time (11.4%).
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Past Performance
How has Coupang performed over the past 5 years?
Past Performance Score
0/6Past Performance Score 0/6
Quality Earnings
Growing Profit Margin
Earnings Trend
Accelerating Growth
Earnings vs Industry
High ROE
-14.2%
Historical annual earnings growth
Earnings and Revenue History
Quality Earnings: CPNG is currently unprofitable.
Growing Profit Margin: CPNG is currently unprofitable.
Past Earnings Growth Analysis
Earnings Trend: CPNG is unprofitable, and losses have increased over the past 5 years at a rate of 14.2% per year.
Accelerating Growth: Unable to compare CPNG's earnings growth over the past year to its 5-year average as it is currently unprofitable
Earnings vs Industry: CPNG is unprofitable, making it difficult to compare its past year earnings growth to the Online Retail industry (-36.3%).
Return on Equity
High ROE: CPNG has a negative Return on Equity (-71.51%), as it is currently unprofitable.
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Financial Health
How is Coupang's financial position?
Financial Health Score
4/6Financial Health Score 4/6
Short Term Liabilities
Long Term Liabilities
Debt Level
Reducing Debt
Stable Cash Runway
Forecast Cash Runway
Financial Position Analysis
Short Term Liabilities: CPNG's short term assets ($5.5B) exceed its short term liabilities ($4.5B).
Long Term Liabilities: CPNG's short term assets ($5.5B) exceed its long term liabilities ($2.2B).
Debt to Equity History and Analysis
Debt Level: CPNG has more cash than its total debt.
Reducing Debt: Insufficient data to determine if CPNG's debt to equity ratio has reduced over the past 5 years.
Balance Sheet
Cash Runway Analysis
For companies that have on average been loss making in the past we assess whether they have at least 1 year of cash runway.
Stable Cash Runway: CPNG has sufficient cash runway for more than 3 years based on its current free cash flow.
Forecast Cash Runway: Insufficient data to determine if CPNG has enough cash runway if its free cash flow continues to grow or shrink based on historical rates.
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Dividend
What is Coupang current dividend yield, its reliability and sustainability?
Dividend Score
0/6Dividend Score 0/6
Notable Dividend
High Dividend
Stable Dividend
Growing Dividend
Earnings Coverage
Cash Flow Coverage
Dividend Yield vs Market
Notable Dividend: Unable to evaluate CPNG's dividend yield against the bottom 25% of dividend payers, as the company has not reported any recent payouts.
High Dividend: Unable to evaluate CPNG's dividend yield against the top 25% of dividend payers, as the company has not reported any recent payouts.
Stability and Growth of Payments
Stable Dividend: Insufficient data to determine if CPNG's dividends per share have been stable in the past.
Growing Dividend: Insufficient data to determine if CPNG's dividend payments have been increasing.
Earnings Payout to Shareholders
Earnings Coverage: Insufficient data to calculate payout ratio to determine if its dividend payments are covered by earnings.
Cash Payout to Shareholders
Cash Flow Coverage: Unable to calculate sustainability of dividends as CPNG has not reported any payouts.
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Management
How experienced are the management team and are they aligned to shareholders interests?
1.8yrs
Average management tenure
CEO
Bom Suk Kim (43 yo)
12.25yrs
Tenure
US$1,587,989
Compensation
Mr. Bom Suk Kim founded Coupang Corp. in 2010 and serves as its Chief Executive Officer and Chairman of the Board. He serves as Director at Coupang Corp. since May 2010. Mr. Kim founded Coupang, Inc. and h...
CEO Compensation Analysis
Compensation vs Market: Bom Suk's total compensation ($USD1.59M) is below average for companies of similar size in the US market ($USD13.00M).
Compensation vs Earnings: Bom Suk's compensation has been consistent with company performance over the past year.
Leadership Team
Experienced Management: CPNG's management team is not considered experienced ( 1.8 years average tenure), which suggests a new team.
Board Members
Experienced Board: CPNG's board of directors are not considered experienced ( 2.8 years average tenure), which suggests a new board.
Ownership
Who are the major shareholders and have insiders been buying or selling?
Insider Trading Volume
Insider Buying: CPNG insiders have sold more shares than they have bought in the past 3 months.
Recent Insider Transactions
Ownership Breakdown
Dilution of Shares: Shareholders have not been meaningfully diluted in the past year.
Top Shareholders
Company Information
Coupang, Inc.'s employee growth, exchange listings and data sources
Key Information
- Name: Coupang, Inc.
- Ticker: CPNG
- Exchange: NYSE
- Founded: 2010
- Industry: Internet and Direct Marketing Retail
- Sector: Retail
- Implied Market Cap: US$33.892b
- Shares outstanding: 1.76b
- Website: https://www.coupang.com
Number of Employees
Location
- Coupang, Inc.
- Tower 730,570
- Songpa-Daero
- Seoul
- 5510
- South Korea
Listings
Company Analysis and Financial Data Status
| Data | Last Updated (UTC time) |
|---|---|
| Company Analysis | 2022/08/06 00:00 |
| End of Day Share Price | 2022/08/05 00:00 |
| Earnings | 2022/03/31 |
| Annual Earnings | 2021/12/31 |
Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more here.