Coupang’s marketplace attracts a large number of merchants, including small- and medium-sized businesses, which enables it to obtain a wide and unique selection of merchandise. This helps high-quality merchants compete holistically on the overall customer experience. This results in lowering barriers to entry for merchants and improving the customer experience, encouraging repeat purchasing and generating higher sales for merchants. Coupang operates the only major payment experience in its home market, supporting a “one-tap” experience without additional verification.
In light of the recent acquisition of the luxury fashion platform Farfetch by a Korean e-commerce giant, Coupang is emerging as a key player on the global stage. Here we get to know the Korean business company, as its potential begins to grow more on an international scale. For the moment, Coupang is South Korea’s biggest e-commerce retailer, its status further cemented by people stuck at home during the pandemic and those in the country who crave faster delivery.
Through his 10+ years analyzing countless companies, Michael has accumulated outstanding professional experience in tech and energy and a following of over 40K on Seeking Alpha. With a focus on tech and “the Great Energy Transition (including uranium)”, Michael runs a concentrated portfolio with approximately 15 to 20 stocks and an average holding period of 18 months. Therefore, I believe that approximately $2.3 billion of EBITDA could be on the cards for Coupang’s core segment in 2024. This would leave the business priced at 14x forward EBITDA. The wider one shows that Coupang’s core, Product Commerce, segment saw its underlying profitability increase by nearly 2% points y/y from approximately 5.1% to 7.1%. This led to its underlying profitability, increasing its EBITDA by 67% y/y.
Coupang’s fully integrated payments service offers a seamless app purchase experience, enabling customers to shop and pay without needing a fingerprint, facial scan, or password verification. Coupang has built an end-to-end integrated network of technology and infrastructure capabilities, enabling it to address tradeoffs that customers have reluctantly come to accept in e-commerce. Coupang’s success has faced scrutiny related to the lengths they go to keep their delivery times as low as possible, resulting in poor working conditions. Founded in 1993, The Motley Fool is a financial services company dedicated to making the world smarter, happier, and richer.
I project $2.3 billion EBITDA for the core segment, indicating that the stock is undervalued, while at the same time acknowledging that Coupang, being a foreign business, will not command a US-like multiple in valuation. The positive aspects undoubtedly point to its steady and reassuring growth rates. What’s more, the next several quarters don’t appear to be too challenging compared with the prior year’s quarters, meaning that Coupang should easily be able to sustain a mid-10s% percent CAGR for a while. As I mentioned above, I think the valuation is compelling at these prices. With the stock closing today at $14.39, it means the enterprise value is now around $23.6 billion (which includes more than $2.1 billion of net cash on the balance sheet). This could change with Farfetch now becoming a Korean company.
Coupang is centered on building an end-to-end integrated technology and infrastructure system to deliver a superior customer experience, launch new offerings, and offer effective merchant solutions. The company is also currently working on Coupang Pay internally and they also have a food delivery service called Coupang Eats. While it’s still early to assess the full impact, this acquisition positions Coupang to potentially transform the customer experience in https://www.investorynews.com/ the luxury fashion segment. Farfetch, with its $4 billion GMV, brings a new dimension to Coupang’s portfolio, offering the potential to capture a significant share of the untapped luxury e-commerce market. The integration of Farfetch aligns with Coupang’s commitment to providing diverse, high-quality offerings and could open avenues for substantial value creation. My investment thesis starts with Coupang’s solid execution in its core e-commerce business.
Quick Commerce aims to achieve higher speed than Rocket Delivery, which means deliveries could be done in less than an hour. Coupang has faced increasing scrutiny after several of its employees died from what local labor advocates and politicians blamed on poor work conditions. According to the South Korean Public Service and Transport Workers union, at least eight warehouse and transportation employees at the company died from overwork over the past year.
Coupang is doing pretty well domestically, and while international expansion, specifically to Taiwan, seems to be the next big thing to be excited about, I think the next leg of growth will come from a completely different area.
However, I went back and forth with my position in Coupang for almost a year, selling entirely when the stock could not hold key levels and buying again at the pullbacks. During this period, the stock price has literally stayed flat at around the $15-$16 range, with some buying opportunities in March 2023 and a 52-week high in August 2023 when the price reached almost $20 per share. In 2019, Coupang launched its Rocket WOW membership program for a flat monthly fee. It began by offering unlimited free shipping for millions of products with no minimum spend. Today, millions of members also enjoy Dawn Delivery and Same-Day Delivery shipping options, free unlimited returns for 30 days, and Rocket Fresh groceries. Korea is the fourth largest economy in Asia and the twelfth largest globally as of 2022, with a gross domestic product (“GDP”) of $1.8 trillion and GDP per capita of $32,730.
Immediately, what you’ll notice is the 50 basis point expansion in underlying profitability. But what if I told you that Coupang’s core profitability is actually clipping much higher than this, but this profitability is being masked by its “Other Projects”, named Developing Offerings? Nonetheless, I remain bullish on its prospects and believe this stock is a rewarding investment, with undeniable prospects. As investors have continued to embrace a risk-off sentiment, anything that is not the magnificent 7 mega caps appears not to be rewarded with any positive traction. Jonah Lupton is a former Wall Street wealth advisor and portfolio manager turned entrepreneur and full-time investor/trader.
Get stock recommendations, portfolio guidance, and more from The Motley Fool’s premium services. David and Tom just revealed what they believe are the https://www.currency-trading.org/ ten best stocks for investors to buy right now… and Coupang, Inc. wasn’t one of them! That’s right — they think these 10 stocks are even better buys.
I have been on Industry Focus very skeptical [laughs] of food delivery, restaurant delivery. So to me that’s not the greatest business to be in, but for them because, again, this is a compressed company, a country with really dense cities, it is a sustainable business model in the long term. It’s just getting it right, so that there is a humane balance for the freelancers who are taking these deliveries for them to be able to earn a decent living without risking their lives.
Rocket Fresh is Korea’s largest online grocer that gets all fresh produce delivered in cold-chain logistics within one day. By eliminating all styrofoam, Coupang uses Fresh bags to deliver groceries, whereby customers https://www.topforexnews.org/ can leave empty bags outside their doors to be picked up by Coupang drivers on the next delivery. Coupang has built a business model to address these tradeoffs and transform the customer experience.
How they do that economically, I don’t know, that’s a business risk. But I think we can look at the company’s early history and see a commitment on management’s part to treating workers fairly. But as for the subcontracted part, that is a risk for every delivery-type company in the world that is using third parties to pick up stuff from restaurants and take it to a consumer. This is something that you utilize the business model because it’s efficient.
Net retail sales represent most (~90%) of the net revenues Coupang earns from online product sales of its owned inventory to customers. Net other revenue includes commissions earned from merchants selling their products through Coupang’s apps or websites. Coupang is not the merchant of record in these transactions, nor does it take possession of the related inventory.
