Friday POW!
Pick of the Week
Friday Pick of the Week (POW) ↦ COUPANG (CPNG)
TLDR* summary:
The Amazon of South Korea. This is, of course, not a totally fair comparison, but it conveys their business model with the important exception that it does not have an Amazon Web Services (AWS) division.
Coupang’s inflection is here: After years of infrastructure investment, free cash flow has flipped positive, margins are expanding, and operating income is rising at a healthy clip.
Logistics moat is unmatched: 70% of South Korea’s population lives within 7 miles of a Coupang center, enabling next-day delivery at scale competitors can’t touch.
Revenue has nearly doubled to ~$35 billion since 2021: >17% CAGR despite macro headwinds; gross margins have climbed from mid-teens to around 30% as scale has kicked in.
Capex falling, leverage rising: Major infrastructure is already built, letting incremental revenue ride existing assets. Operating leverage now accelerating.
Rocket WOW drives retention: Coupang’s Prime-like membership increases order frequency and lowers churn, improving unit economics.
High-margin growth layers emerging: Ads, fintech (Coupang Pay), and food delivery (Coupang Eats) are scaling on top of existing infrastructure.
Valuation is still anchored to old narrative: Despite strong fundamentals, it trades at a steep discount to AMZN, MELI, and SE at similar growth stages. A fast-growing internet retailer trading at just one times annual revenues is highly unusual.
Balance sheet is a weapon: Bloomberg shows $2.8 billion in cash, net of debt.
This is the net cash BB shows ($2.8 billion). Value Line has it at $375 mill:
Taiwan is next: Coupang is replicating its Korea model in another dense, high-income market — burning capital to reset consumer expectations.
Market misreads it as a retailer: It’s a distribution utility with embedded infrastructure — once the narrative catches up, multiple expansion could be sharp and nonlinear.
Technically, it does look like around $20 is a critical level. Below that next meaningful support is in the mid-teens. Therefore, a tight stop could be used, like around $18.50.
*This is our antidote to Too Long, Did Not Read
