The past six months have been a windfall for Coupang’s shareholders. The company’s stock price has jumped 40.7%, setting a new 52-week high of $31.23 per share. This performance may have investors wondering how to approach the situation.
Following the strength, is CPNG a buy right now? Or is the market overestimating its value? Find out in our full research report, it’s free.
Why Does Coupang Spark Debate?
Founded in 2010 by Harvard Business School student Bom Kim, Coupang (NYSE:CPNG) is an e-commerce giant often referred to as the "Amazon of South Korea".
Two Positive Attributes:
1. Active Customers Skyrocket, Fueling Growth Opportunities
As an online retailer, Coupang generates revenue growth by expanding its number of users and the average order size in dollars.
Over the last two years, Coupang’s active customers, a key performance metric for the company, increased by 11.9% annually to 23.6 million in the latest quarter. This growth rate is strong for a consumer internet business and indicates people love using its offerings. 
2. Outstanding Long-Term EPS Growth
Analyzing the change in earnings per share (EPS) shows whether a company's incremental sales were profitable – for example, revenue could be inflated through excessive spending on advertising and promotions.
Coupang’s full-year EPS flipped from negative to positive over the last three years. This is a good sign and shows it’s at an inflection point.
One Reason to be Careful:
Low Gross Margin Reveals Weak Structural Profitability
For online retail (separate from online marketplaces) businesses like Coupang, gross profit tells us how much money the company gets to keep after covering the base cost of its products and services, which typically include the cost of acquiring the products sold, shipping and fulfillment, customer service, and digital infrastructure.
Coupang’s unit economics are far below other consumer internet companies because it must carry inventories as an online retailer. This means it has relatively higher capital intensity than a pure software business like Meta or Airbnb and signals it operates in a competitive market. As you can see below, it averaged a 28% gross margin over the last two years. Said differently, Coupang had to pay a chunky $71.96 to its service providers for every $100 in revenue. 
Final Judgment
Coupang’s merits more than compensate for its flaws, and after the recent rally, the stock trades at 32.2× forward EV/EBITDA (or $31.23 per share). Is now a good time to buy despite the apparent froth? See for yourself in our comprehensive research report, it’s free.
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