Coupang (CPNG) Pre-earnings Analysis
Coupang may appeal to investors looking for a U.S.-based company that primarily caters to South Korea and Taiwan. It is an e-commerce platform that also offers services like food delivery, online streaming, and fintech, making it a “mini” Amazon in South Korea.
Looking at its financials, Coupang has been on a hot streak, growing revenue at low double-digit rates for the past four years. However, the company has struggled to maintain strong profit margins. A shift in global trade is not expected to alleviate this issue, so investors considering this trade should watch tariff developments closely. The company’s earnings call on May 6th should clarify how tariffs may impact the business.
Operationally, Coupang appears to be performing well and may currently be priced fairly. The market seems to agree, as CPNG has ranged between $18.00 and $27.00 over the past twelve months. While the company’s revenue growth is impressive, it is not extraordinary. Its thin margins are weighing on the overall P/E ratio, which stands at 284x earnings. Many compare Coupang to Amazon, but Amazon’s profits stem largely from AWS, not just its online marketplace. Coupang’s next move should focus on improving its gross profit, without that, it lacks a proprietary edge.