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Down 40% Since Going Public, Is This Growth Stock a Buy?

By Neil Rozenbaum – Updated Sep 7, 2021 at 9:45AM

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At current valuations, Coupang does seem very cheap compared to its peers in the industry.

In this video, I will be talking about the "South Korean Amazon" called Coupang (CPNG -1.31%) and whether it is a buy right now, being down 40% since going public. You can find the video below.

What is Coupang?

Coupang is South Korea's largest e-commerce player, offers the fastest delivery, has the largest logistics footprint, and controls the whole customer experience, which is very important and a huge moat. It went from being called the Groupon of South Korea to being called the Amazon of South Korea -- a definite step up. That shows how quickly things can pivot with the right management and vision. 

Right now Coupang mostly operates in South Korea, but some reports have indicated that it is testing the waters in Japan and Taiwan. In terms of 2020 revenue, South Korea is the 12th-largest economy and sixth-largest market for e-commerce, ahead of France and behind Germany.

What's next?

Coupang reported second-quarter revenue growth of 71% and adjusted gross profit growth of 86%. Active customers increased 26% year over year to 17 million and revenue per active customer grew 36% year over year. The company's two newest segments, Fresh and Eats, are showing strong growth. Fresh's revenue grew over 100% YOY and Eats' revenue has nearly tripled over the past two quarters. 

There are a couple of reasons the stock is down 40% since going public, but the most relevant is uncertainty about whether it can succeed outside of South Korea. 

For full insights watch the video below. 

*Stock prices used were the closing prices of September 3, 2021. The video was published on September 4, 2021.

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Neil Rozenbaum owns shares of Amazon. The Motley Fool owns shares of and recommends Amazon and Coupang, Inc. The Motley Fool recommends the following options: long January 2022 $1,920 calls on Amazon and short January 2022 $1,940 calls on Amazon. The Motley Fool has a disclosure policyNeil is an affiliate of The Motley Fool and may be compensated for promoting its services. If you choose to subscribe through his link, he will earn some extra money that supports his channel. His opinions remain his own and are unaffected by The Motley Fool.

Stocks Mentioned

Coupang, Inc. Stock Quote
Coupang, Inc.
CPNG
$19.63 (-1.31%) $0.26
Amazon.com Stock Quote
Amazon.com
AMZN
$94.13 (-1.44%) $-1.37

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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