Coupang (CPNG 0.83%) is often referred to as the "Amazon of South Korea." It's a fast-growing e-commerce store that is following a strategy similar to its U.S. counterpart by offering a range of services like food delivery (Coupang Eats) and entertainment (Coupang Play) to supplement its online retail business.
The thing is, Coupang is not trying to be the next Amazon. It started out years ago as an eBay-like marketplace. Even though Coupang was profitable, founder and CEO Bom Kim didn't like the direction in which the company was headed and decided to completely restructure the business into what it is today.
Since 2018, the company has grown revenue from $4 billion to $31 billion on a trailing-12-month basis. It dominates the Korean e-commerce market. While it's uncertain how far Coupang might be able to expand beyond South Korea over the long term, the stock is offering a reasonable valuation that may undervalue its prospects in existing markets.
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Solid momentum in 2025
On a currency-neutral basis, Coupang has delivered consistent growth of 20% or more since its initial public offering in 2021. It entered 2025 with continued momentum, with revenue up 21% year over year in the first quarter, excluding currency changes.
Coupang has built a strong advantage with its logistics infrastructure that can deliver orders overnight to customers living in high-density population centers. This has kept competitors like Amazon at bay, allowing Coupang to gain over 23 million customers, and it's still growing. Its active customer count grew 9% year over year last quarter.
Moreover, Coupang is seeing its free cash flow and margins improve as it scales investments and grows revenue. It generated $1 billion in free cash flow on a trailing-12-month basis, which is a notable improvement over the negative free cash flow reported just a few years ago. Investments in technology, automation, and robotics are benefiting its ability to deliver packages faster while reducing costs.
Investors should expect Coupang's free cash flow to increase over the next several years, which could benefit the stock.
Why the stock is a long-term buy
Coupang has a solid lead in South Korea, but investors need to know if its strategy will work outside of its home market. On that score, there are early signs that Coupang could be successful expanding in select international markets.
The e-commerce giant entered Taiwan in 2021 and continues to expand. It recently launched its WOW membership program there, bringing free shipping and other benefits for a subscription fee. The continued investment in Taiwan indicates management is seeing high returns on capital spending.
But it's also important to know that the South Korean retail market alone is worth $500 billion. Coupang controls a very small percentage of the combined market in both countries, providing plenty of long-term growth potential.
What makes the stock appealing is that its valuation doesn't require sky-high growth for investors to earn good returns. The stock's price-to-sales multiple of 1.7 is fair for its current pace of growth.
Given its growth trajectory and opportunities ahead, investors buying the stock today could double their investment in five years, assuming Coupang can continue growing revenue around 15% per year and the stock trades at the same price-to-sales multiple. If Coupang continues to show more potential for international growth, the upside could be quite significant over the next few decades.
