These attributes include High Mobile Penetration, the rise of homegrown technology companies that are driving a bigger and deeper selection of merchandise at highly competitive prices for consumers, and embracing convenient online shopping. I think their mission statement rings true for a lot of their customers who probably can’t remember what life was like before Coupang. We’re good at delivery, and they talked about in their S-1 how they take some of the principles from their normal grocery and consumables delivery, that knowledge and transfer it to the sort of contracted business to compete in the food delivery space. I can see them testing new business lines over time and becoming something more than just a company that’s focused on this back and forth e-commerce with customers. Coupang believes that historically, online shopping has forced customers to accept various compromises.

  1. The trucks and the operation belong to Coupang, a start-up founded by a Harvard Business School dropout that has shaken up shopping in South Korea, an industry long dominated by huge, button-down conglomerates.
  2. Rocket Fresh is Korea’s largest online grocer that gets all fresh produce delivered in cold-chain logistics within one day.
  3. What I like about Coupang is that with plenty of free cash flow that keeps only growing, the company can afford to take such bets.
  4. It is set to double by 2030, expanding at a CAGR of approximately 11%.
  5. They also classify all their delivery drivers as full-time employees, which gives them full benefits, so they’re not contract workers.

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. The number below (37.5x) is still using 2023 Q4 estimates (plus the next 3 quarters) since they have not been reported yet. If we look ahead to CY2024, CPNG is trading at 35.9x GAAP earnings with a 44% average EPS growth rate over the next few years. This means CPNG everything you need to know about bonds is trading at a PEG ratio below 1.0x, especially if you just look at CY2024 earnings, which are expected to grow by 64-70% depending on whether we use GAAP or non-GAAP, so CPNG looks pretty cheap in my opinion if they can hit these estimates. I do think CPNG can get to $2.2+ billion in net income by CY2027 but I’m also being a little conservative with my numbers because it’s hard to know what kind of revenue and margin contribution we’ll see from Farfetch and what international expansion might turn into.

For example, the Rocket WOW membership program that was introduced in 2019 provided customers with unlimited free shipping, Dawn Delivery, Same-Day Delivery, free returns for 30 days, and Rocket Fresh groceries. Rocket Fresh has become a leading online grocer nationwide, and Coupang Eats, the largest online food delivery service in Korea, directly contracts partners for efficient service. Since its launch, Rocket Fresh has grown to become the leading nationwide online grocer.

Coupang Eats

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. Complete integration enables Coupang to control and improve the entire experience, from the customer app to the delivery of the order at the customer’s door, while increasing efficiency and lowering prices for customers. Coupang reimagined the e-commerce experience with its Rocket Delivery service that promises faster deliveries, a vast selection, low prices, and easy returns.

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AMZ Advisers is a full-service eCommerce consultancy focused on creating growth opportunities for Brands / Manufacturers / Private labels across the US, Europe, Canada, and Asia. Our team of 45+ talented individuals has come together to drive sales for brands worldwide since 2014. Although Coupang is making great efforts to continue growing as a business, there hasn’t been much expansion in other countries, but this might be just a matter of time. Coupang used to rely on a group of subcontractors to be able to ship and deliver their orders, but in January this year, the company also launched Coupang Logistics, thus bringing its wide fulfillment network in-house. The company debuted with a $35 stock price and was able to get an initial $60 billion valuation, $10 billion more from what they had originally pursued. Coupang has become one of the largest ecommerce companies in the world.

Jonah leads an investing group, Fundamental Growth Investor, where he and his team publish the most comprehensive deep dives on public companies (7,000+ words). Jonah also shares his investing and trading portfolios (3.5-year CAGR of 86%) alongside investment models, daily webcasts, quarterly earnings analysis, trading alerts, and a live chat community group. If CPNG reports better-than-expected revenues and earnings with strong guidance, then I’m expecting some big moves over the next 6-12 months driven by multiple expansions.

Coupang vs Amazon

Those investments allowed Coupang to balloon into a 50,000-employee business in 11 years. I am a former Wall Street wealth advisor and portfolio manager turned entrepreneur and full-time investor/trader. I run a premium service called Fundamental Growth Investor on Seeking Alpha’s Marketplace where my team publishes the most comprehensive deep dives on public companies. The service also includes quarterly updates on portfolio companies, current portfolio with position sizes, investment models, trading alerts, live chat, daily webcasts, trading charts, and much more. For me personally, the biggest risk right now with I think Coupang, Inc. is a bargain at current prices and might have a 200% upside over the next 3-5 years, but that means revenues need to compound at ~12% per year while net income margins expand by approximately 100 bps per year. Is selling pressure from SoftBank, which still owns more than $5.5 billion of the company (approximately 24% of the outstanding shares).

This part of the business has been growing more than twice as fast as the overall business. There are plenty of reasons why the stock price did not move much for over two years, but I believe now its time has finally come, and I will outline why further in this write-up. Before I dig into my investment thesis, for transparent purposes, I have a 2.6% position in my investment portfolio, which I opened just recently. I may trim this position before earnings because I’m slightly worried about margin compression from the Farfetch acquisition, which could spark a sell-off post-earnings (I will cover this more below).

Plus, the availability and assortment of goods is many times greater. My investment thesis starts with Coupang’s solid execution in its core e-commerce business. Even though the Korean market is many times smaller than the US, it is still a significant market. South Korea is a country with just a little over 50 million citizens, 96%+ of which own a smartphone connected to high-speed internet, and a culture that highly values convenience because of very active and robust lifestyles. The company is based in Seoul, South Korea, and Seattle, the United States. Since then, Coupang has grown impressively especially during the Covid-19 pandemic when demands for online shopping peaked.

Coupang also launched Coupang Eats, the largest online food delivery service in Korea, which delivers food to customers using only delivery partners directly contracted by us. But their policy is that workers do not work more than five days a week and they do not work more than 52 hours per week. They also classify all their delivery drivers as full-time employees, which gives them full benefits, so they’re not contract workers.

Here we get to know the Korean business company, as its potential begins to grow more on an international scale. The business model of Coupang categorizes its revenue as (1) net retail sales and (2) net other revenue. Coupang also sources a large proportion of merchandise directly from manufacturers, which can result in better customer pricing. 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.

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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. 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. Korea is home to one of the largest and fastest-growing e-commerce opportunities anywhere in the world. Total e-commerce spending was $128 billion in 2019, which is expected to grow to $206 billion by 2024, implying a CAGR of approximately 10%.48 Total e-commerce spend for all Internet buyers in Korea. Since its founding in 2010, Coupang has become a dominant force in South Korean commerce, largely thanks to its lightning-fast delivery speeds.

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