Coupang (CPNG 1.14%) has been one of Asia's most talked-about growth stories. The U.S.-based technology company, best known for transforming online shopping in South Korea, has been frequently compared to Amazon. Its Rocket Delivery service, relentless focus on logistics, and expanding ecosystem in fintech, streaming, and food delivery make it a fascinating business to watch.
But even great companies come with risks. As Coupang's stock gains attention from long-term investors, it's worth taking a closer look at the key challenges that could shape its next chapter. Here are three significant risks to consider before purchasing Coupang stock.
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1. Overreliance on South Korea
Despite being headquartered in Seattle, Coupang still depends overwhelmingly on South Korea for its revenue. While it doesn't break down its revenue by country, it says (in its annual report) that it has historically generated a substantial majority of its revenue from sales in South Korea, and its future performance will depend in large part on South Korea's future economic growth.
That exposure creates structural risk. South Korea's e-commerce penetration is already among the highest globally, indicating that domestic growth may slow over time. Consumer spending patterns, competition dynamics, and regulatory changes could all affect Coupang's margins and demand.
The company is working to reduce this dependence through international expansion, with Taiwan as its first major test market. Early signs are encouraging -- management highlighted triple-digit growth in the region during Q2 2025 -- but Taiwan remains a small piece of the puzzle. Until Coupang successfully scales beyond South Korea, it will remain vulnerable to local economic fluctuations.
In other words, investors should view Coupang's expansion efforts not just as growth opportunities but as a necessity to diversify its revenue base.
2. Thin margins and high reinvestment need
Coupang's biggest advantage --its unmatched logistics infrastructure --is also one of its biggest financial burdens. The company has spent years building a dense network of fulfillment and delivery centers, ensuring that most South Koreans live within a short drive of one. This extensive network enables same-day and even dawn deliveries -- but it also means constant reinvestment in facilities, automation, and labor.
So even as revenue continues to climb, investors should remember that Coupang operates in a low-margin industry where profitability can be volatile. In Q2 2025, the company posted $8.5 billion in revenue and an adjusted EBITDA margin of 5%, showing clear progress from its earlier years of losses. However, scaling internationally or investing in new services like Coupang Eats and Coupang Play could delay margin expansion from here onward.
It's a delicate balance: Coupang must continue to invest to defend its moat while maintaining cost discipline to satisfy investors. The company has recently demonstrated improving efficiency through automation and AI-driven operations, but competition and logistics costs remain persistent headwinds.
3. Rising competition across verticals
Coupang no longer competes in just one arena. Its push into new sectors -- food delivery, streaming, fintech, and advertising -- has expanded its addressable market but also exposed it to new competitors.
- E-commerce: Faces ongoing battles with Naver and other local players.
- Food delivery: Baedal Minjok dominates, forcing Coupang Eats to spend heavily to gain share.
- Fintech: Competes with rivals like KakaoPay.
While diversification helps broaden Coupang's reach, execution risk is rising. Each vertical has different economics, customer expectations, and competitors. Missteps in any one of these areas could erode profitability or divert management's attention from the core business.
That said, Coupang's ecosystem approach of combining logistics, payments, and entertainment under one umbrella does create cross-selling synergies. The challenge is to ensure that these expansions drive incremental value over time through improved customer engagement and increased wallet share.
In other words, Coupang's ability to manage competition across multiple fronts will determine whether it becomes a true technology ecosystem or remains a retail-heavy player.
What does it mean for investors?
Coupang has built one of Asia's most impressive tech platforms. It's profitable, growing steadily, and investing in new markets that could define its next decade. Yet, investors should approach with realism. The company's dependence on South Korea, thin margins, and intensifying competition present meaningful risks that could cap near-term upside.
Still, if Coupang can replicate its success in Taiwan and gradually expand into other Asian markets, it could evolve into something far greater than a regional player. For investors, that balance between risk and opportunity makes Coupang a story worth watching closely.
