Shares of leading South Korean e-commerce juggernaut Coupang (CPNG +1.14%) were down 7% as of 2:30 p.m. ET on Friday, according to data provided by S&P Global Market Intelligence.
While there was no direct news tied to the company, the drop comes from worries about President Yoon Suk Yeol's ouster in South Korea and a wobbly stock market in the United States stemming from Wednesday's tariffs.
However, since neither of these events explicitly impacts Coupang's operations, I'd argue that this sell-off creates an opportunity for investors, with the company's shares 25% below their one-year highs.
Blocking out the noise -- Coupang just keeps improving
While Coupang's share price may be lower now, its business is stronger than ever. Growing revenue and gross profit by 24% and 29% across 2024, Coupang continued to not only grow by double-digit rates, but also position itself for a future of improving profitability and cash generation.
Though net income and free cash flow (FCF) dropped in 2024, these declines primarily came from management investing in Coupang's future. Ranging from robotics and automation in its warehouses to new infrastructure in Taiwan to integrating luxury goods platform Farfetch into its ecosystem, these investments will fuel Coupang's long-term growth and rising profitability.
In the fourth quarter, for example, Coupang's sales in Taiwan grew 23% quarter over quarter. Roughly half the population of South Korea, Taiwan could prove to be a valuable new growth market.
Meanwhile, the company's acquisition of Farfetch already appears to be paying dividends as it has turned the once unprofitable upstart into a breakeven business under the Coupang umbrella.
Trading at just 20 times cash from operations, if Coupang wasn't investing heavily in capital expenditures for its future, it would be an FCF-generating machine -- a similar story to Amazon about a decade ago.
