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CPNG Stock May Very Well Have Its Worst Days Behind It

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Coupang (NYSE:CPNG) stock is on the uptrend after several difficult months at the market.

The Coupang (CPNG stock) campus in Silicon Valley, California.

Source: Michael Vi / Shutterstock.com

Rising inflation rates and the obvious move away from growth stocks hurt CPNG.

The “Amazon (NASDAQ:AMZN)” of South Korea” has attracted some major investor attention in the past month, though. Investing mogul Stanley Druckenmiller recently bet one-fifth of his fund on Coupang and perhaps you should follow his lead.

Coupang is highly diversified, with tentacles in multiple verticals. In that sense, it similar to Amazon. In some respects, though, it does things significantly better than Amazon.

For instance, its Rocket Delivery system delivers almost 100% of its orders within 24 hours. Amazon’s Prime service is much slower.

Moreover, Coupang’s monthly Rocket membership has multiple benefits and services costing just $2.45. Prime is $14.99 per month.

Though there are risks with its business, it’s doing well to diversify them through cross-border expansion, investing in profitable new verticals, and rapidly monetizing its platform.

Coupang recently released its fourth-quarter results; it fell short of analyst expectations across both lines. Net revenues improved by 34% from the prior-year period to $5.1 billion but fell short of analyst expectations by $102.6 million.

Its net losses widened from $83 million to $405 million during the quarter. Its loss per share figure of 23 cents missed estimates by four cents.

Despite the so-so results, the company’s Chief Financial Officer Gaurav Anand states that the enterprise has “entered 2022 focused on driving efficiencies and improving operating leverage.”

We talked about how the company’s gross margins are on track to rise by 2.5% during the first quarter and be at their highest levels since the beginning of the pandemic. Additionally, the company expects an EBITDA loss of less than $400 million for the full year, which is ahead of analyst estimates by at least $223 million.

Evolution

Coupang has had an impressive run in the saturated South Korean market. It has posted double-digit growth since 2018 despite the cut-throat competition in its sector.

The South Korean eCommerce industry could account for over $200 billion in annual sales in the next couple of years. South Korean eCommerce revenues in 2021 were at roughly $92 billion.

Despite its impressive performance, it has expanded into Japan and Taiwan, with Singapore rumored to be next. The high population density of these countries will make it cost-effective for Coupang to expand its operations.

Furthermore, some of the company’s new businesses have started showing incredible promise. Especially its food delivery and grocery business has been immensely successful over the past year.

Rocket Fresh, its fresh grocery segment, has grown by almost triple digits in recent quarters. Coupang Eats, its food delivery offering, has pushed away from the dominant players in the space, such as Bae-Min.

Delivery is where Coupang excels, and it has effectively leveraged its competencies beyond traditional online retail. It has also launched its streaming service called Coupang Play. Since its launch, the platform has been among the most downloaded apps in the country.

Final Word on CPNG Stock

CPNG stock had it rough for the most part last year, but the recent investment of Stanley Druckenmiller appears to have kickstarted a rebound.

Growth stocks such as Coupang will have it tough in the interim but will likely climb to new highs when the macro-economic environment settles down.

Coupang operates a robust business model which still has plenty of remaining upside. Hence, it’s an excellent long-term bet in the Asian eCommerce space.

On the date of publication, Muslim Farooque did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Muslim Farooque is a keen investor and an optimist at heart. A life-long gamer and tech enthusiast, he has a particular affinity for analyzing technology stocks. Muslim holds a bachelor’s of science degree in applied accounting from Oxford Brookes University.

Muslim Farooque is a keen investor and an optimist at heart. A life-long gamer and tech enthusiast, he has a particular affinity for analyzing technology stocks. Muslim holds a bachelor’s of science degree in applied accounting from Oxford Brookes University.

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