Coupang Share Price Forecast August 2021 – Time to Buy CPNG?
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Shares of South Korean e-commerce giant Coupang (NYSE: CPNG) are in the green today, after closing at $31.78 on August 24th (19:59 UTC-4). The company’s shares have been declining steadily since it released its earnings report after debuting in the market earlier this year. As the shares are down by 30% from their highs, many investors are wondering whether it’s the right time to buy them.
Coupang – Technical Analysis
According to the financial statement from Coupang, the market cap of the company is at $55.157 billion with total assets worth $8.575 billion. Revenue for 2020 was at $11.97 billion compared to $6.27 billion a year ago.
Moving averages for Coupang such as Exponential Moving Average (50)(37.44), Simple Moving Average (50)(38.27), Exponential Moving Average (100)(39.69) and Simple Moving Average (100)(39.72) are pointing towards selling. Oscillators such as Commodity Channel Index (20)(−91.72), Average Directional Index (14) (20.48) and Awesome Oscillator(−5.90) are neutral.
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Recent Developments
On August 11th, Coupang released its reported earnings for the second quarter which showed that revenue is up by 71% reaching $4.48 billion. This is evidence of how well the company’s model resonates with the South Korean population as it marked the 15th consecutive quarter of 50% year-over-year revenue growth. Active customers also grew by 26% year over year to reach 17 million while revenue per active customer reached $263. It is vital for the company to continue enhancing sales per customer at a strong pace a getting close to market saturation in South Korea.
There are rumours flying around that the company is planning on making moves in Asian markets such as Taiwan, Singapore and Japan. There isn’t any need for Coupang to go international yet. But with only 50 million people in Korea, it’s only a matter of time before the market becomes saturated. The company’s quick delivery model works well in densely populated areas so it’s best suited for expansion into Japan, Taiwan and Singapore. However, this is not expected in the near future.
Should You Buy CPNG Shares?
Investors who are interested in CPNG shares should consider the revenue streams of the company. Coupandd under its Eats and Rocket Fresh brands have been aiding growth in the food and grocery delivery sector. Annual revenue reached a $2 billion annual revenue run rate and tripled revenue over the past two quarters. While both these sectors are unprofitable at the moment, the company allocates its existing delivery and warehouse teams to power these segments. Coupang also has a good track record with its employees whom they give a five-day workweek and a minimum of 15 days off a year, which is far ahead of the industry norm. During its IPO, it also gifted restricted stock units which are similar to stock options to 39000 frontline workers. All these initiatives, although expensive, are expected to improve the company culture over the long term.
With a market cap that is upwards of $52 billion and a trailing 12-month revenue of more than $15 billion, the shares might seem cheap to some investors, especially considering that it has a price–to–sales ratio of 2.9. However, the company’s profit margins do not match that revenue. If Coupang has to maintain this historical growth, it has to rapidly grow its gross profit, eventually net earnings and cash flow over the next few years. Thus, investors shouldn’t be enticed by the low P/S since the shares are still expensive at the moment. They would be better off not picking up the shares at the moment.
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