Ready for lift-off

                   May 29th, 2023, written by Crazy Miser

Key points:

Analysis

In South Korea, Coupang is the fastest-growing e-commerce company, with shares trading for about $16 as of late May. The online shopping giant made money in its first year. The total number of active customers increased by 5%, and sales of products increased by 8%. As a result, their customer base is expanding and they are acquiring new customers who do more business with them on a quarterly basis. The long-term target adjusted EBITDA was given as +10% during Q4 2022 because management believes they will be able to maintain this performance. Additionally, prominent investors like Stanley Druckenmiller and Massachusetts Institute of Technology continued to add shares during Q4.

Future Growth

During Q1 2023, management decided to cut losses on Japan and focus on their long-term opportunities in South Korea and Taiwan. Taiwan is seeing the same transformative potential that they saw in South Korea when Rocket Delivery was launched and will continue to invest into that market as the benefits outweigh the risk. They are continuing to drive higher levels of profit without sacrificing cost, selection, or service quality. They are continuing to invest in technology, automation, and infrastructure to scale higher margins and efficiency. They delivered a record gross profit of $1.4 billion with a gross profit margin of 24.5% which represents a 36% year-over-year improvement. Finally, the CFO restated his confidence in ability to achieve their long-term margin target of 10% or higher.

Valuation

CPNG fundamentals by TradingView

In our opinion, Coupang is significantly undervalued when compared to comparable e-commerce firms like Shopify, Sea Limited, Etsy, and Amazon at its present growth rate and projected future growth. We believe the stock should be trading with a price-to-sales ratio between 4 and 5, with a price target of $40-65 per share based on current analysis, given Coupang's price-to-sales ratio of 1.3 compared to the rest of the e-commerce companies with an average of 4.63.

Technical Analysis

Webull.com - Coupang Chart Webull Desktop 

Although technical analysis cannot guarantee success, it can help us make some forecasts about where we think the stock will go in the coming weeks or months. The chart may look flat, however, we believe the stock has a lot of potential energy for the upside. We believe the stock bottomed at roughly $9.00 per share during May 2022 and started its reversal earlier this year. Coupang remains far below the current trend-line and we advise investors to dollar-cost-average at the current price.