Last week was a big one for Coupang (NYSE: CPNG). The Korea-based e-commerce platform reported its full-year earnings and saw its stock pop more than 10% after putting up strong growth and profitability in the fourth quarter. Taking a longer view, the stock is way below its high-water mark set back in 2021, off 62% from all-time highs as of this writing.
Coupang is still under $20 a share and looks like a bargain for investors at these prices. Here’s why you should consider adding this e-commerce upstart to your portfolio in 2024.
CPNG Total Return Level Chart
Vertically integrated competitive moat in e-commerce
Coupang began in South Korea as a competitor to Groupon but quickly pivoted around 10 years ago to build an e-commerce platform based on Amazon‘s success. Like its North American counterpart, Coupang has built its own delivery network and fulfillment warehouses to vertically integrate its operations and offer services to third-party merchants. It also has a Prime-like subscription bundle called Rocket WOW that offers free shipping, free returns, and other discounts for Coupang’s services.
This strategy has worked wonderfully in the densely populated South Korean region. In 2023, Coupang generated $24.4 billion in revenue, up 20% year-over-year on a constant currency basis. It has 14 million Rocket WOW subscribers and 21 million active customers, making up a huge portion of the roughly 50 million people living in South Korea. Coupang continues to gain market share by growing faster than the South Korean retail market and e-commerce sector. It is likely doing so because of its vertical integration and the superior value proposition it can offer shoppers.
South Korean retail spending is estimated to be around $500 billion each year. While Coupang is not a player in every subset of this market, its broad-based e-commerce platform and services hit a good chunk of it. With around $25 billion in annual revenue, there is plenty of room for Coupang to double or even triple that amount this decade if it continues to gain share in its home market.
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