Coupang Stock Is a Solid Long-Term Buy on This Latest Dip

Coupang (NYSE:CPNG) stock is being touted as the Amazon of South Korea, though, granted, CPNG stock has come under pressure recently.

The Coupang campus in Silicon Valley, California.
Source: Michael Vi / Shutterstock.com

Since topping out at $69, the stock retreated to around $45 a share, but don’t let that scare you away.

Instead, use the weakness as an opportunity to buy CPNG stock. With plenty of catalysts ahead of it, CPNG could easily return to $69.

Not only is e-commerce exploding across South Korea, but Goldman Sachs (NYSE:GSis also bullish with a price target of $62 a share. Yuanta Securities’ Daniel Yoo believes the company could grow 30% over the next few years.  Plus, while it has yet to turn a profit, the company has managed to reduce its losses.

The company is growing so quickly, billionaire owner Bom Suk Kim has said he’s looking forward to a day where people wonder how they ever got along without Coupang.

A Closer Look at CPNG Stock

South Korea is the third-largest e-commerce market in the world. According to Coupang’s prospectus, total spending on e-commerce was $128 billion.

By 2024, that could be up to $206 billion. As also noted by the company, 70% of all 51.7 million South Koreans live within seven miles of one of its distribution centers.

In addition, analysts at Statista say user penetration in South Korea could be up to 74.5% this year, and up to 83% over the next four years.

Goldman Sachs’ analyst Eric Cha just initiated coverage with a “buy” rating and a $62 target.

He said the company grew 91% in 2020 and managed to capture half of the e-commerce total addressable market. Cha also noted the company could take up to 28% of the market by 2023, which is double his earlier estimate.

“[Coupang is] becoming the biggest e-commerce business within Korea and 24% market share,” said Yuanta Securities’ Daniel Yoo. “I think it might actually even rise further. It is possible that they can actually gain as much as 30%+ over the next few years.”

Mizuho Securities analyst James Lee has a neutral rating and a $50 price target. He believes the CPNG stock can grow 30% over the next five years.

The Bottom Line on CPNG Stock

Net revenue over the last year was a $12 billion improvement year-over-year. Gross profits were up 92.3% to $2 billion in 2020 year over year, as well.

Plus, Coupang has a customer base of about 14.8 million, up from 11.8 million year-over-year. However, considering there are just over 51 million people in South Korea, that number could rise from here.

While the company has yet to turn a profit, it has managed to decrease its losses. In 2018, for example, it had a net loss of $1.1 billion. In 2020, that was down to $475 million.

Oversold, Coupang could easily run back to $69 with patience. Remember, e-commerce is exploding across South Korea, Goldman Sachs is bullish with a price target of $62 a share. Yuanta Securities’ Daniel Yoo believes the company could grow 30% over the next few years.

In addition, while it only has a customer base of 14.8 million, that could easily grow. After all, there are more than 51 million South Koreans it has access to. I’d be a buy CPNG stock on the dip.

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

Ian Cooper, a contributor to InvestorPlace.com, has been analyzing stocks and options for web-based advisories since 1999.


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