CPNG

Coupang Inc - Ordinary Shares - Class A

TMT, Consumer


Presented:12/13/2023
Price:$16.35
Cap:$29.23B
Current Price:$25.18
Cap:$45.17B

Presented

Date12/13/2023
Price$16.35
Market Cap$29.23B
Ent Value$28.27B
P/E Ratio68.5x
Book Value$1.64
Div Yield0%
Shares O/S1,787.78M
Ave Daily Vol8,042,475
Short Int1.61%

Current

Price$25.18
Market Cap$45.17B
Coupang, Inc. engages in operating an e-commerce platform. It operates through the Product Commerce and Growth Initiatives segments. The Product Commerce segment provides core retail and marketplace offerings and Rocket Fresh, as well as advertising products associated with these offerings. The Growth Initiatives segment includes nascent offerings and services, including Coupang Eats, Coupang Play, international and fintech initiatives. The company was founded in 2010 and is headquartered in Seattle, WA.

Publicly traded companies mentioned herein: Alibaba Group Holding Ltd (BABA), Amazon.com Inc (AMZN), Coupang Inc (CPNG), Naver Corp (035420 KS), PDD Holdings Inc (PDD), SoftBank Group Corp (9984 JP)

Highlights

The presenter is long shares of Coupang Inc (CPNG), often referred to as “the Amazon of Korea.” CPNG has run the Amazon playbook, investing heavily to build out an extremely dense footprint across fulfillment & logistics centers, delivery (including next-day delivery), end-to-end, and more. Adding to these capabilities, he notes that it offers a membership similar to Amazon Prime (Rocket Wow) and describes CPNG as the only “true” first-party player. These efforts have allowed the company to earn a ~25% e-commerce market share in Korea, which he expects to grow to 40% – 50% and is only capped by regulation. At $16 per share, the stock trades at 11x – 13x his 2025 FCF and EPS estimates of $1.25 – $1.50 (vs. consensus ~$1 FCF and $0.66 EPS). In that scenario, he thinks a ~25x valuation is more appropriate given the company is still early in its penetration potential. This opportunity exists because there are questions around management’s commitment to margins, as well as concerns about competition from TEMU and AliExpress. The presenter views these bear theses as overstated given his expectation that some recent capex investment will roll off, leading to significant EBITDA growth by 2H’24, and the fact that stiffening competition has not materialized in any material market share shifts.

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Idea Discussion

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