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That’s pretty ugly, but it’s also good that Coupang raised money near the top of the growth stock surge early in 2021. After raising $4.6 billion, the company now has around $4 billion in cash as of the third quarter and very little debt. The current market cap is about $37.4 billion, just a little over two times trailing-12-month sales. That also seems like a fairly reasonable price to pay for this e-commerce retailer. Notably, revenues are accelerating, making Coupang one of the best e-commerce stocks to buy. Besides, the company has a considerable growth opportunity since it only holds a single-digit market share of total retail and grocery in the Korean market.
(CPNG) raised $3.4 billion in an IPO on Thursday, March 11th 2021. The company issued 120,000,000 shares at a price of $27.00-$30.00 per share. Goldman Sachs, Allen & Co., J.P.Morgan and Citigroup served as the underwriters for the IPO and HSBC, Deutsche Bank Securities, UBS Investment Bank, Mizuho Securities and CLSA were co-managers.
- Online retail has grown tremendously over the past decade at the expense of brick-and-mortar retail.
- That makes Coupang the largest IPO in the U.S. this year and one of the top 25 biggest listings of all time stateside, by deal size.
- Revenue was up 71% in the period to $4.48 billion, marking the 15th consecutive quarter of 50% year-over-year revenue growth, showing how well Coupang’s model resonates with the South Korean population.
- Coupang’s shares closed their first day of trading at $49.25.
Shares of Coupang (CPNG -0.23%) rocketed over 40% on Thursday, marking a successful initial public offering (IPO) for the South Korean e-commerce star. In its annual report issued earlier this month, Coupang disclosed that it had sin stocks about 1.58 billion Class A shares outstanding, and roughly 175 million Class B shares outstanding. The only difference between the share classes is voting rights, so in all, Coupang has roughly 1.75 billion shares outstanding.
This bad week came on the heels of a 12.7% decline last week, so investors may be wondering if we are near a bottom. Currently, Coupang trades at $21.20, down 60% from its IPO price last March. IP has a low trailing price-earnings ratio of 8.5 and a high dividend yield of 5.4%. Consequently, as we look out to early 2024, Coupang could probably have enough steam left to end up delivering high teens or as much as 20% CAGR. And given that context, as we look ahead, this could be a very interesting stock, particularly given its improving profitability. As you can see above, all of Coupang’s tactics are clearly delivering more value to customers, with its latest active customer figures increasing by 10% y/y.
Earlier in April 2021, local Korean media had reported that EMART, Coupang, and other retail players like Homeplus and Lotte Mart were engaged in “price wars” with each other. South Korea’s e-commerce market has an estimated value of $90.1 billion in 2020 with an annual growth rate of 22.3%, according to data analytics firm GlobalData. That is expected to grow at a compounded annual rate of 12% to reach $141.8 billion in 2024. The company said it had priced 130 million shares at $35 apiece, raising $4.55 billion and valuing the company around $60 billion. That makes Coupang the largest IPO in the U.S. this year and one of the top 25 biggest listings of all time stateside, by deal size. “What you really need to know is whether or not, in the business environment of Korea and e-commerce, can they be able to generate a huge, profitable return on capital,” Yoo said Thursday on CNBC’s “Street Signs Asia.”
Rocket Fresh
With the prolonged lockdowns during the pandemic, this secular shift accelerated. Consumers are now increasingly aware of online retail’s convenience and lower costs. Since this secular theme is just starting, e-commerce stocks will be major beneficiaries for decades. Coupang has recently broken into profitability so their prior investments seem to be paying off. The company was generating losses four years ago, but now it’s earning 8.2% which is a sight for sore eyes. And unsurprisingly, like most companies trying to break into the black, Coupang is utilizing 596% more capital than it was four years ago.
- As highlighted in the second section of the current article, Coupang’s valuations have de-rated in the past on expectations of slower top line expansion.
- In summary, Coupang is still growing in the most recent quarter (Q3 2021).
- Coupang has been rated by Bank of America, Barclays, Deutsche Bank Aktiengesellschaft, and Mizuho in the past 90 days.
- That’s where you can check out our FREE intrinsic value estimation that compares the share price and estimated value.
- The overall CPI was the highest on record since 1982 and the core number was the highest since 1991.
Furthermore, if an insider or early investor were to divest a portion of their Coupang holdings, it’s hardly cause for alarm. There were recently seven investors that held positions of more than 50 million shares, with some position sizes as high as 568 million shares. There are lots of reasons to sell shares and how accurate is technical analysis given the time of year, it’s conceivable that tax planning may come into play — that is if the rumors are true at all. Even if a secondary stock sale were to result in the release of 50 million new shares, the total dilution would amount to less than 3% — hardly worthy of a 20% decline in the share price.
CPNG Stock News Headlines
There have been rumors that Coupang is going to move into other Asian markets, with job postings in places like Singapore, Taiwan, and Japan. When asked about it on the conference call, CEO Bom Kim declined to give any details but said it was something the company is planning on doing. With such a large opportunity to go after in South Korea, estimated by Coupang to be $500 billion a year by 2024, there is no need for Coupang to expand internationally yet. But with only 50 million people in South Korea, there is definitely a ceiling to how much spend can come from the nation alone. “Most of the other competitors really did not show any type of changes in terms of market share,” he said. Coupang’s rivals include eBay-owned Gmarket, WeMakePrice, Naver Shopping among others.
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JPMorgan Chase is an advertising partner of The Ascent, a Motley Fool company. South Korea has one of the highest population densities, with a large population living in large cities like Seoul. Coupang has been the leading e-commerce business and has numerous growth opportunities. Also, the company is ramping up monetization of its ads business.
Massively Undervalued Dividend Stocks to Buy for High Total Returns
As explained above, there is a high likelihood that CPNG’s revenue growth will moderate significantly in the coming five years, and this could help to explain or justify Coupang’s seemingly low valuations. CPNG’s revenue growth is expected to moderate over time in the subsequent five years, as per the sell-side’s consensus estimates laid out in the chart below. In the subsequent section, I discuss how the Wall Street analysts’ expectations of CPNG have changed over the past couple of months, in terms of the market consensus’ price targets.
Similar to other countries and markets, large platform companies have been targeted for anti-trust issues in South Korea, and CPNG is no exception. In summary, Coupang is still growing in the most recent quarter (Q3 2021). But CPNG is not growing as fast as it did in Q and Q2 2021, and the slowing growth momentum has been a drag on Coupang’s share price performance.
Coupang doesn’t plan to enter the Indian market, the company said, refuting a local media report that claimed that the South Korean e-commerce firm had expressed interest in entering the South Asian n… Analysts like Coupang more than other Retail/Wholesale companies. The consensus rating for Coupang is Moderate Buy while the average consensus rating for retail/wholesale companies is Hold.
Coupang Consensus Rating and Price Target (
As of this writing, shares trade at a market cap of $31 billion, less than half of its IPO value. While just a 2.5% net income margin, there is plenty of room for Coupang to expand this margin as the business matures, especially if gross profit continues to grow at a quicker pace than revenue. Over the long term, management believes it can hit an adjusted profit of at least 10%. I don’t view Coupang’s current valuations as demanding, but these appear fair given expectations of slower top line growth for the company in the intermediate term. Therefore, I decide that a Neutral rating for CPNG’s shares is justified. As highlighted in the second section of the current article, Coupang’s valuations have de-rated in the past on expectations of slower top line expansion.
Last April, RBC Capital raised its rating on IP stock to “outperform.” RBC believes that the company’s performance is poised to rebound due to growth in the demand for industrial packaging. Further, the company reported “that domestic package volume grew on the order of 400,000 pieces per day by the end of the quarter, “Seeking Alpha reported. Going forward, Ground’s profits should continue to increase, boosting highest net worth company the company’s overall bottom line. Through his 9+ years analyzing countless companies, Michael has accumulated outstanding professional experience in the energy sector and a following of over 40K on Seeking Alpha. My Marketplace highlights a portfolio of undervalued investment opportunities – stocks with rapid growth potential, driven by top quality management, while these stocks are cheaply valued.