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3 Reasons To Avoid Investing In Coupang

Aug. 02, 2021 1:17 PM ETCoupang, Inc. (CPNG) Stock37 Comments
WideAlpha profile picture


  • Coupang is growing its e-commerce revenues at an outstanding rate.
  • The company dominates in its home market of South Korea, but has yet to meaningfully expand to new countries.
  • Many investors liken the company to Amazon, but the two main differences are that Coupang is at an earlier stage of growth, and doesn't have the profitable AWS business.
  • We believe the shares are overpriced currently, and would only consider investing if they traded at significantly lower prices.

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Coupang (NYSE:CPNG) is a Korean company often compared to Amazon (AMZN) given its focus on e-commerce, market places, and quick deliveries. In some ways, it is even more impressive than Amazon as almost 100% of its orders

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Comments (37)

"We believe the shares are overpriced currently, and would only consider investing if they traded at significantly lower prices." - Good call. Are you considering investing at current price? at what price would you want to get in?
Here’s a cohort analysis relative to others. Coupang is the only company better than Amazon in retention.

I have been working and living in Seoul for 12 years. Coupang is a company that I use about 3 to 4 times a week, sometimes more. Their reputation among my family and friends is fantastic. Living in this city, we come to expect rapid delivery and instant everything. But even with those expectations, Coupang is a conversation topic due to how fast it is. In addition to being fast, the product is great. Since covid, about 80% of our groceries come from Coupang (the rest from the street markets in front of my house). There service is amazing too. I think over the course of using Coupang, we have had 2 or 3 errors in our orders. We text/call and they refund the order and re-deliver directly (within an hour or two) at no cost. So we keep the original order and get the re-order as well. I'm talking free beans here! The new effort to reduce packaging is very real and impressive. Instead of using cardboard, styrofoam, plastic bubble pack stuff, we now have what look like large insulated cooler bags (8 x 24 x 24 inch maybe?). They have a couple ice packs or dry ice in them for frozen stuff. Works great. Just toss the cooler bag back out on the porch and they pick it up whenever. Looking out my window now, I can see them on most of my neighbors porches.

I was excited to see the IPO and have been watching this ticker for a while waiting for an entry point. The opening day it dropped so hard, I just couldn't understand what was happening. And still, even with the fire and setbacks, I still don't get why this is trading the way it has been.

I still haven't started a position. I guess I'll continue waiting for a bounce. In the meantime, I am trying to find some reason that it won't bounce. This article doesn't provide much evidence to support a bear thesis. Anybody have a better take? Other things we can consider other than "it's not Amazon?"
Michael Dolen profile picture
@Ryanderle Thank you for sharing. With foreign companies, it's of the utmost importance to hear from those who directly interact with the company, whether that be as a customer (you), employee, or supplier/partner.

Assuming nothing happens to Bom Kim, I've had no doubt that $CPNG has cemented its dominance in South Korea and will continue to grow there.

The concern is that your market is about the size of my state, California. Okay, maybe you're 20% larger but CA has higher incomes so it's a wash. If Amazon's California retail operations were split off as a separate company, with zero AWS, no Prime Video and other divisions, would you pay $55 billion for retail only Amazon California? I certainly wouldn't.

Whether Coupang offers exception returns over the next decade or two is entirely dependent on expanding outside of its home market. Even if they pull off Singapore, that won't be enough. They will need to add some major population segments elsewhere.

Will they be able to do that? Hopefully, as we need competition, but it will be an expensive fight in any market $AMZN operates.
(according to Google) Amazon has 300 million users, Coupang has 15 million.

Dividing the market cap of amazon by (300/15) would give you a market cap of 85 billion. (I know it's a stupid calculation but by way of comparison).
Michael Dolen profile picture
@Vanamo You are forgetting AWS (40% minimum of $AMZN market cap), Prime Video (some estimates peg $150-200B valuation, so another 10% or so of market cap), Ring, IMDB, Twitch, and so on.

I own a little CPNG so I have no reason to hate on it, just being realistic that it’s not a bargain right now.
Insiders also holding by 35$ per share, right now this price is like a present, need to check margin of safety, I think they will not got a new fire.
I wouldn't be surprised to see AMZN buy this company.
Michael Dolen profile picture
@johngonole Almost all of Amazon's acquisitions are $1-2B or less, except for Whole Foods ($13B if I recall correctly) and MGM ($9B). To take out Coupang they would be spending upwards of $100B. Not going to happen.

Amazon's track record shows they are OK with missing out on a market, rather than plowing lots of resources into it and losing. In the case of S. Korea, I believe it's too small of a market to justify spending that much.
Q loss is < 0.1* Qrevenue so this could turn profitable whenever they want.
How is anything in this article sound negative
@BBHC1 Haha same thoughts here
Given the elevated IV selling puts around the 30/32.5 strike looks very appealing, might wait til earnings to see if the stock plummets like it did last quarter post results.
I m a buyer, if BG invested in Coupang. There’s no worries!!!
10 Aug. 2021
I agree with you
kyle2503 profile picture
The review is based on Coupang being a home grown Champion in South Korea. Technically - so is Alibaba. And Amazon is also not a big presence in Asia. So it’s just utter bs.
My understanding is that Bill Gates has invested at least $100 million in CPNG. That's not a lot of money to him, but it would be for most everyone else. I do not own CPNG, but a drop 10-20% below where BG invested (around $39) would get me interested too.
Michael Dolen profile picture
@InvestorMan Sr. I may be wrong but I thought Gates bought in an earlier funding round, at a lower valuation?
@Michael Dolen You may be right. I just read he sold several hundred million of MSFT after his divorce was announced and put $100 million in CPNG. That may it sound like it was post IPO and in upper $30's. He might have shares both early and later. Nevertheless, regardless of when he invested he's poorer today than yesterday. Not that we all shouldn't have his problems.
All in! Thanks
Warrior2323 profile picture
Time to go in
EV/Sales (FWD) for Coupand is 3.2
.. for SE it is 17.2
@nextgeni but SE has a much higher ceiling....
Joseph Webster profile picture
I'm more excited about owning this company than I was before reading lol. Thanks for the researching and presenting both sides of the coin, though you seem to be a positive guy (a good thing)
absolutely not agree with an author, cpng from the beginnig of June has started to work in Japan and has very big support from Soft Bank in Japan, and from the June Japan has started quarantine because of covid, so CPNG has good kick starting in this country, and Japan will know about the, much more quickly. Also CPNG will start work in Singapore and Malaysia soon.
Chris Lau profile picture
@Dmitrii Buiaklu CPNG's down 12% in AH. Are you building a bigger position? CPNG is one of several alternatives to AMZN.
@Chris Lau yes, I will take much more, they have loosed 158 millions after fire in their fulfillment center. Everything other will be okay with this giant.
Thank you for the article. Having read it. I just added more to my portfolio. Lets say you are correct. Then i believe it is a takeover target. Good Luck
Since many regard Coupang as a young Amazon, then compare Coupang to Amazon without AWS in the earlier days then. Coupang is getting there and it's strenghthening its grip in Korea. The news is out that it's already exploring further expansion into other countries. What's there not to like?
Danimalc profile picture
The South Korean economy is growing every year. A lot of brands are investing heavily into the South Korean kpop and digital culture. CPNG will definitely reap the rewards. Definitely dont agree with your assessments.
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