When South Korean e-commerce company Coupang (NYSE:CPNG) filed for its initial public offering (IPO) on Feb. 12, it was the biggest U.S. IPO of the year at that time. Yet, the price action of CPNG stock has remained muted and traders don’t seem particularly enthused about the company.

Personally, I think the market is sitting on a sleeping giant here. It could wake up at any moment, surprising the market and rewarding early shareholders.

Not long ago, Coupang finally received its first batch of official big-bank analyst coverage notes. The reviews were mixed.

Again, I don’t believe the investing community fully appreciates the company’s growth potential.

That’s not necessarily a bad thing. If anything, it’s a chance for contrarian investors to grab a hidden gem and hold it for the long term, reaping the rewards in due time.

A Closer Look at Coupang

Coupang, the largest e-commerce service in Korea, had its U.S. IPO on March 11 on the New York Stock Exchange.

The company had priced its shares at $35. However, upon the stock’s debut, it surged 40% to $63.50.

On its first day of trading, Coupang’s closing share price was $49.25.

With that, the company raised $4.6 billion from the IPO. That easily exceeded the expectation of $3.6 billion that the company had set.

Over the next few weeks, CPNG just drifted sideways. The shares were trading between $41 and $43 this morning.

It appears, then, that the stock hasn’t found its direction yet. Will it be a gainer or a loser in 2021? Perhaps we can appeal to some prominent analysts for guidance here.

Wall Street Weighs In

Not only is Coupang the largest South Korean e-commerce company, but it’s also the country’s third-largest employer.

Therefore, we should expect Wall Street analysts to herald Coupang as the next Amazon (NASDAQ:AMZN) or Alibaba (NYSE:BABA), right?

That would make sense, but the reviews are all over the map. For instance, Deutsche Bank analyst Peter Milliken initiated his coverage with a “hold” rating and an unambitious $46 price target.

And yet, Milliken provided a compelling argument in favor of the company. “Coupang has become the leader in the world’s fifth-largest e-commerce market, with a 14% share of a fragmented market,” Milliken contended.

Furthermore, Milliken believes that Coupang “has displaced prior leaders helped by superior delivery and service.” He expects the company “to continue to translate a superior customer proposition into market share” and anticipates a “long runway of increasing revenue and margins from relatively low levels.”

That’s a powerful bull case, so what’s with the uninspiring rating and price target? These analysts never cease to confuse me.

Let’s move on to Mizuho Securities analyst James Lee, who assigned Coupang a “neutral” rating and $50 target price.

Winner Takes Most

Again, we have an unenthusiastic rating. Yet, Lee believes that Coupang can grow its sales at a 30% compounded rate over the next five years, to reach a whopping $41 billion by 2025. Go figure!

One analyst who seems to see a promising growth story here is Goldman Sachs analyst Eric Cha, who initiated his coverage on the stock with a “buy” rating and a $62 price target.

Now we’re getting somewhere.

Cha’s argument is persuasive as he asserts that Coupang continues to take market share in a “winner takes most” retail story.

In defense of this position, Cha reports that the company grew 91% last year. Moreover, Cha observes that in 2020, Coupang captured about half of the growth that year in the Korean e-commerce market.

He expects that Coupang could capture 28% of the Korean (and by that, I assume that Cha means South Korean) e-commerce market by 2023. With that in mind, Cha’s “buy” rating makes perfect sense to me.

The Bottom Line

As I see it, there’s a huge opportunity here that some analysts and traders are missing out on.

If Coupang manages to fulfill its potential as a “winner takes most” retail story, the investors could have an underappreciated treasure on their hands.

On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article.