When Coupang (CPNG) posted third-quarter results, investors bid shares up from around $16 to over $20. They expected the e-commerce firm to post a loss. Instead, Coupang reported a five-cent EPS on a GAAP basis.
Coupang, based in South Korea, posted revenue growing by 9.9% to $5.1 billion. It earned $91 million by keeping its operating expenditures flat. Instead of over-investing in projects, Coupang improved its processes. This included automation.
Shareholders should expect Coupang to grow its EBITDA by 7% to 10% annually. The firm needs to invest in its food delivery business. Furthermore, it must expand beyond South Korea to grow. To minimize costs, it will not rush its expansion into other Asian regions.
By 2025 investors should expect the overall commerce market to exceed $600 billion. In Korea, the retail market grew by 7% Y/Y in Q3. Assuming Covid does not disrupt demand, expect customers to enjoy Coupang’s broad selection, low prices, and fast delivery in all categories.
Canada’s Shopify (SHOP) has similar valuation risks as Coupan. However, SHOP stock rallied sharply after posting only a two-cent loss per share. Revenue grew by 22.3% to $1.37 billion.
Coupang’s stronger revenue growth and favorable product mix suggest that it is a better buy than Shopify.
