Shares of Coupang (NYSE: CPNG) rocketed 25% higher on Thursday after the South Korean e-commerce company reported strong third-quarter earnings. Coupang showed strong growth and margin expansion compared with a year ago, making investors optimistic about the company's prospects. As of 12:29 p.m. ET, the stock is up 22.5% on the day.
On Nov. 9, Coupang reported its earnings for the three months ending in September. Revenue was up 27% year over year in constant currency (adjusted for the devaluing of the South Korean won), to $5.1 billion in the period. More importantly, gross profit grew 64% year over year to $1.2 billion, with gross margins expanding to 24.2%, up 8 percentage points from a year ago. This rapid margin expansion helped the company achieve a positive net income of $91 million in the quarter, which likely impressed investors as the company is still investing heavily for growth.
These growth initiatives include a few different things. First, the company is continually expanding its vertically integrated e-commerce and delivery business. Over the first nine months of this year, Coupang has invested $700 million in capital expenditures, much of this going to new warehouses and logistics infrastructure. This vertical integration gives Coupang a competitive advantage and is why the company dominates the South Korean e-commerce market. In the quarter, active customers grew 7% to 18 million and spending per active customer grew 19% year over year in constant currency.
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Why Coupang Stock Rocketed 25% Higher on Thursday