A Coupang fulfillment center in Bucheon, South Korea.
SeongJoon Cho/Bloomberg
Coupang shares are slipping on Wednesday after J.P. Morgan picked up coverage of the newly public South Korean e-commerce giant with a Neutral rating and a $48 target price, just slightly above the current level.
Coupang (ticker: CPNG) went public in March at $35 a share, opening for trading at $63.50. The stock has since come under some selling pressure, recently trading in the mid-$40s. Coupang is by far the largest player in South Korean e-commerce and ranks as the country’s third-largest employer.
Earlier this week, Coupang picked up its first batch of post-IPO analyst reports, with a Buy rating and a $62 target from Goldman Sachs but more cautious views from Mizuho (which set a Neutral rating and a $50 target) and Deutsche Bank (which launched with a Hold rating and a $46 target).
J.P. Morgan analyst Stanley Yang echoes some of the previous comments: He’s bullish on the company’s opportunity to dominate the South Korean retail business, but he has some concerns on valuation.
“Coupang has strengthened its leading e-commerce position in Korea driven by superior user experience on unrivaled logistics infrastructure,” Yang writes in a research note. “The management execution has been impressive during the pandemic, driving its domestic e-commerce GMV [gross merchandise value] share to 14% in 2020 versus 7% in 2018.”
He argues that Coupang can grow GMV at a 31% compounded rate through 2025, boosting its market share to 28% of domestic e-commerce and 14% of the country’s overall retail market.
Yang expects Coupang to turn profitable on an Ebitda (earnings before interest, taxes, depreciation, and amortization) basis in 2023. But he also writes that the risk/reward in Coupang shares looks balanced at current levels.
Coupang stock is off 0.9%, at $46.13, in recent trading. The S&P 500 is up 0.2%.
Write to Eric J. Savitz at [email protected]
