What happened
Shares of South Korean e-commerce company Coupang (CPNG +0.09%) lost one-third of their value in March, according to data from S&P Global Market Intelligence.
Coupang reported earnings during the beginning of the month that came up well short of analyst expectations, leading to a swift downturn after big gains in February. Then in the middle of March, large shareholder Softbank (SFTB.Y +5.26%) sold a very large block of Coupang's shares. On the other hand, after this month's plunge, one analyst thought shares had fallen too far, and put the stock on his "Conviction Buy" list.
NYSE: CPNG
Key Data Points
So what
In the fourth quarter, Coupang grew revenue 34% to $5.1 billion, with net losses per share of $405 million. Both figures came in below expectations. While management put some of the blame on supply chain constraints that limited revenue -- that's a better problem than lower demand -- the market was in an unforgiving mood in March. That was especially true for profit-less growth stocks like Coupang.
In fact, most e-commerce stocks had a difficult March. Interest rates are set to rise sharply, and the world is emerging from the pandemic that had pushed up e-commerce sales. As an indication of investors' sour mood, major shareholder Softbank unloaded $1 billion of Coupang shares in the week following earnings. Softbank may have other reasons for selling, as it has its own financial troubles across its tech-focused portfolio, but having a large shareholder sell shares probably didn't help sentiment. That being said, Softbank still owns 461.2 million shares, worth some $8.2 billion following the sale.
Image source: Getty Images.
Now what
Coupang has now lost nearly half its value from its $35 IPO price one year ago, and is down more than 60% from all-time highs. However, the stock may have fallen to the point where it may be interesting to pick up. Towards the end of March, Coupang was upgraded from "hold" to "buy" by Deutsche Bank. And on Friday, Goldman Sachs put Coupang on its "Conviction Buy" list, even though analyst Eric Cha lowered his price target from $52 to $37.
For those looking to take advantage of the growth stock sell-off, Coupang looks as appetizing as any other stock out there. That's especially true if its earnings miss was the result of labor shortages and not soft demand, as management indicated.
