CPNG - South Korea's E-Commerce Giant Turning Into A Luxury Powerhouse: Coupang

2024-01-31 14:19:12 ET

Summary

• Coupang, Inc.'s unmatched one-day delivery network offers a significant competitive edge in South Korea's e-commerce market.
• Expanding into fintech, food delivery, streaming, and advertising, Coupang creates multiple growth avenues beyond traditional e-commerce.
• Coupang is now profitable on both EBITDA and net income basis while generating significant free cash flow.
• The recent acquisition of Farfetch could be a meaningful catalyst for Coupang's growth (especially outside of South Korea) despite potential short-term margin compression.

I first invested in Coupang, Inc. (CPNG) last January, then did my deep dive a couple of months later, looking at the Korean commerce market, Coupang's different opportunities, its moat, financials, risks, and much more. At that time, Coupang had only started to turn profitable on both Adjusted EBITDA and net income basis and seemed to me to be a decent compounder going forward. I also liked the group of shareholders (except SoftBank), which includes Baillie Gifford and Stanley Druckenmiller. Investing alongside these mastodons confirmed my investment thesis, though there is always a risk that they can sell at any time, as SoftBank continuously does up to this date.

However, I went back and forth with my position in Coupang for almost a year, selling entirely when the stock could not hold key levels and buying again at the pullbacks. During this period, the stock price has literally stayed flat at around the $15-$16 range, with some buying opportunities in March 2023 and a 52-week high in August 2023 when the price reached almost $20 per share....

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