I project $2.3 billion EBITDA for the core segment, indicating that the stock is undervalued, while at the same time acknowledging that Coupang, being a foreign business, will not command a US-like multiple in valuation. The positive aspects undoubtedly point to its steady and reassuring growth rates. What’s more, the next several quarters don’t appear to be too challenging compared with the prior year’s quarters, https://www.dowjonesanalysis.com/ meaning that Coupang should easily be able to sustain a mid-10s% percent CAGR for a while. As I mentioned above, I think the valuation is compelling at these prices. With the stock closing today at $14.39, it means the enterprise value is now around $23.6 billion (which includes more than $2.1 billion of net cash on the balance sheet). This could change with Farfetch now becoming a Korean company.
Coupang’s marketplace attracts a large number of merchants, including small- and medium-sized businesses, which enables it to obtain a wide and unique selection of merchandise. This helps high-quality merchants compete holistically on the overall customer experience. This results in lowering barriers to entry for merchants and improving the customer experience, encouraging repeat purchasing and generating higher sales for merchants. Coupang operates the only major payment experience in its home market, supporting a “one-tap” experience without additional verification.
Rocket Fresh is Korea’s largest online grocer that gets all fresh produce delivered in cold-chain logistics within one day. By eliminating all styrofoam, Coupang uses Fresh bags to deliver groceries, whereby customers can leave empty bags outside their doors to be picked up by Coupang drivers on the next delivery. Coupang has built a business model to address these tradeoffs and transform the customer experience.
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Rocket Fresh
Coupang is doing pretty well domestically, and while international expansion, specifically to Taiwan, seems to be the next big thing to be excited about, I think the next leg of growth will come from a completely different area.
It would be nice in future quarters to see the breakout of that spend. They’re not obligated to provide it, but it’s something I wonder. Of course, you can always track gross profit and operating margin just from the topline numbers every quarter and get a sense from those big aggregate numbers.
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Coupang is centered on building an end-to-end integrated technology and infrastructure system to deliver a superior customer experience, launch new offerings, and offer effective merchant solutions. The company is also currently working on Coupang Pay internally and they also have a food delivery service called Coupang Eats. While it’s still early to assess the full impact, this acquisition positions Coupang to potentially transform the customer experience in the luxury fashion segment. Farfetch, with its $4 billion GMV, brings a new dimension to Coupang’s portfolio, offering the potential to capture a significant share of the untapped luxury e-commerce market. The integration of Farfetch aligns with Coupang’s commitment to providing diverse, high-quality offerings and could open avenues for substantial value creation. My investment thesis starts with Coupang’s solid execution in its core e-commerce business.
- Customers can make seamless payment for all their Coupang orders via Coupang Pay.
- The company is currently trying to enter the American stock market.
- Jonah is looking for companies with 100%+ upside over the next 2-3 years.
Through his 10+ years analyzing countless companies, Michael has accumulated outstanding professional experience in tech and energy and a following of over 40K on Seeking Alpha. With a focus on tech and “the Great Energy Transition (including uranium)”, Michael runs a concentrated portfolio with approximately 15 to 20 stocks and an average holding period of 18 months. Therefore, I believe that approximately $2.3 billion of EBITDA could be on the cards for Coupang’s core segment in 2024. This would leave the business priced at 14x forward EBITDA. The wider one shows that Coupang’s core, Product Commerce, segment saw its underlying profitability increase by nearly 2% points y/y from approximately 5.1% to 7.1%. This led to its underlying profitability, increasing its EBITDA by 67% y/y.
Quick Commerce aims to achieve higher speed than Rocket Delivery, which means deliveries could be done in less than an hour. Coupang has faced increasing scrutiny after several of its employees died from what local labor advocates and politicians blamed on poor work conditions. According to the South Korean Public Service and Transport Workers union, at least eight warehouse and transportation employees at the company died from overwork over the past year.
Coupang’s fully integrated payments service offers a seamless app purchase experience, enabling customers to shop and pay without needing a fingerprint, facial scan, or password verification. Coupang has built an end-to-end integrated network of technology and infrastructure capabilities, enabling it to address tradeoffs that customers have reluctantly come to accept in e-commerce. Coupang’s success has faced scrutiny related to the lengths they go to keep their delivery times as low as possible, resulting in poor working conditions. Founded in 1993, The Motley Fool is a financial services company dedicated to making the world smarter, happier, and richer.
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Jonah also shares his investing and trading portfolios (3.5-year CAGR of 86%) alongside investment models, daily webcasts, quarterly earnings analysis, trading alerts, and a live chat community group. Is selling pressure from SoftBank, which still owns more than $5.5 billion of the company (approximately 24% of the outstanding shares). What I like about Coupang is that with plenty of free cash flow that keeps only growing, the company can afford to take such bets.
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Net retail sales represent most (~90%) of the net revenues Coupang earns from online product sales of its owned inventory to customers. Net other revenue includes commissions earned from merchants selling their products through Coupang’s apps or websites. Coupang is not the merchant of record in these transactions, nor does it take possession of the related inventory.
How they do that economically, I don’t know, that’s a business risk. But I think we can look at the company’s early history and see a commitment on management’s part to treating workers fairly. But as for the subcontracted part, https://www.topforexnews.org/ that is a risk for every delivery-type company in the world that is using third parties to pick up stuff from restaurants and take it to a consumer. This is something that you utilize the business model because it’s efficient.