Shares of Coupang (CPNG +0.48%) have quietly climbed by 77% in the past year amid strong growth from the South Korean e-commerce leader. The rally is a welcomed turn of events for longtime investors following a challenging post-pandemic period with disappointing company results. Nevertheless, the stock remains 51% below its 2021 IPO price of $63.50, reflecting a deep reset of expectations in the time since.
Could the latest trends signal the start of a bigger turnaround? Let's discuss what to do with Coupang stock in 2025.
NYSE: CPNG
Key Data Points
The case to buy or hold Coupang stock
Coupang is recognized as one of Asia's largest retailers, offering everything from groceries to electronics and fashion through its online marketplace. Its Coupang Wow subscription has attracted loyal customers with same-day delivery, exclusive deals bundled with a streaming movies platform, and gym access in select locations.
Operating primarily in South Korea, Coupang's dominance has effectively kept Amazon from gaining a significant presence, highlighting Coupang's competitive advantage in understanding local customer needs.
In recent years, the company has expanded its Asian footprint, establishing logistics hubs in Singapore and Taiwan, which have emerged as key growth drivers. In 2024, Coupang acquired the specialty online luxury fashion marketplace Farfetch, marking an effort to diversify beyond its mass-market retail focus into a new category with a global reach. While Farfetch isn't yet profitable, it's already contributing to the top line.
Image source: Getty Images.
In the third quarter (for the period ended Sept. 30, 2024), net revenue climbed by an impressive 27% year over year, or 20% excluding Farfetch's impact, driven by an 11% increase in active customers to 22.5 million who are spending more per transaction and demonstrating a good level of engagement.
Perhaps the bigger story has been the momentum in Coupang's developing offerings, which covers new services such as Coupang Eats, a food delivery service, and Coupang Pay, a financial technology (fintech) payments service. The segment posted Q3 revenue growth of 146% from last year, even excluding the boost from Farfetch.
Management remains optimistic about these trends. Wall Street analysts tracked by Yahoo! Finance expect 24.7% revenue growth in 2024 (pending final Q4 results), followed by 15.5% in 2025. The adjusted earnings per share (EPS) outlook is particularly exciting, projected to reach $0.49 in 2025 versus $0.01 in 2024.
Investors confident the company is in the early stages of consolidating its market share and expanding internationally have plenty of reasons to buy the stock today.
| Metric | 2024 Estimate | 2025 Estimate |
|---|---|---|
| Revenue | $30.4 billion | $35.1 billion |
| Revenue growth (YOY) | 24.7% | 15.5% |
| Adjusted EPS | $0.01 | $0.49 |
Data source: Yahoo Finance. YOY = year over year.
The case to sell Coupang stock
There's a lot to like about Coupang capturing themes like e-commerce and fintech adoption in emerging markets. Nevertheless, it's a smart idea to examine investments critically and consider where things could go wrong.
Despite the market expectation for improving earnings, Coupang's inconsistent record in recent years in what remains a highly competitive industry warrants some caution. Beyond Korea, multiple retailers are targeting the same growth opportunities in Asia-Pacific, adding a layer of uncertainty.
This is against a backdrop of Coupang's stock trading at 48 times its consensus 2025 EPS as a forward price-to-earnings (P/E) ratio. This valuation level isn't cheap next to regional e-commerce players such as Sea Limited, with a forward P/E ratio of 34, and Chinese players Alibaba and PDD Holdings trading at an earnings multiple closer to 10.
The market appears to be pricing Coupang with a higher premium, in part given its incorporation as a U.S. company. Nevertheless, the stock also looks expensive relative to Amazon, which has a forward P/E of 38. This isn't necessarily a problem for the stock, assuming it continues to generate strong growth, but it does highlight the risk in a scenario where results begin to disappoint.
Investors who believe Coupang will struggle to achieve consistent profitability may want to consider selling or avoiding this stock in 2025. 
CPNG PE Ratio (Forward) data by YCharts
Decision time: Cautiously bullish
2025 will be a critical year for Coupang to reaffirm its long-term potential. I'm cautiously bullish and believe the stock is buy-worthy, with a good chance the share price will be higher by this time next year. Investors willing to stomach some potential stock market volatility can find a place for it within a diversified portfolio.
