What happened
Shares of recent IPO Coupang (CPNG 1.44%) fell in July, down 13.2% for the month, according to data from S&P Global Market Intelligence. The stock has gone on a wild ride since debuting in March, shooting up 40% the day of its IPO before falling almost 40% in early May. Currently, shares are down around 25% year to date (YTD).
So what
Coupang stock continues to trade at a discount to its first-day IPO pop when the stock price closed at $49.25. This isn't surprising considering that historically, two-thirds of IPOs underperform the broad market in their first three years of trading.
Image source: Getty Images.
In Coupang's case, there hasn't been any news or particular reason for the stock's recent underperformance. In June, the company got some potentially positive news when a warehouse fire gave it the opportunity to refinance some debt at a lower interest rate, but other than that, the company's newsroom has been quiet lately.
The South Korean e-commerce company is slated to report its second-quarter results on Aug. 11. In the first quarter, Coupang's revenue grew 74% year over year to $4.2 billion, with total active customers growing 21% to 16 million. The company lost almost $300 million in the quarter as it continued to build out its delivery and fulfillment business that forms the backbone of its e-commerce offering.
Now what
If you already own shares of Coupang, then you were likely not happy with how the stock performed in July. But if you are a prospective shareholder, you now have the opportunity to buy shares of the stock at a 13% discount. With a market cap of $66 billion, Coupang has a trailing price-to-sales (P/S) ratio of 4.6 and a forward P/S of 2.9.
This isn't cheap for an e-commerce business with only 17.4% gross margins, but if you believe Coupang can continue growing its business in South Korea and expand its offering to other nations like Singapore, Malaysia, and Japan, then now could be a good time to buy if you're interested in owning a piece of this fast-growing business.
