CPNG - Is Coupang stock worth buying after WOW membership price hike?

2024-04-12 11:59:50 ET

Coupang Inc (NYSE: CPNG) is up more than 10% on Friday after announcing a rather big increase in its monthly membership fee.

Coupang stock is already up more than 50%

The “WOW” membership will now cost incoming subscribers a whopping 7,890 won – up from 4,990 thus far. Existing clients will have to pay the higher fee from August.

Coupang ended last year with some 14 million WOW members.

Shares of the eCommerce platform have gained over 50% since its year-to-date low in early February. But there’s reason to believe that is not out of juice just yet.

To begin with, South Korea has a population density that tops the United States by about 15 times which makes it perfectly suitable for eCommerce. Simply put, it bodes well for Coupang stock in terms of margin growth.

Why else is worth owning?

Price hike may also be a meaningful benefit for Coupang as its WOW membership continues to bring in new subscribers. Coupang Play (part of that loyalty program) topped all other apps in terms of downloads over the past two years (in South Korea).

is attractive also because it has close to $6.0 billion in cash that it can use to debut in new markets and launch new product verticals. So, the growth prospects look promising.

Lastly, Coupang shares are currently trading at about 24 times earnings which is not expensive per se considering the New York listed firm is improving its free cash flow margin.

The $37 billion company saw a 20% annualised growth in its sales last year and is expected to grow them by another 17% in 2024. In December, Coupang came to rescue Farfetch ( find out more ).

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