Coupang (CPNG US): Under the Regulator's Microscope

Coupang (CPNG US): Heavier Bleeding Takes the Wind Out of Coupang's Sails

Korea FTC Says It Will Regulate Coupang on Search Algorithm Manipulation

Coupang (CPNG US): Going Mano E Mano with JD.com

Coupang 1Q 2021 Earnings - Decline in Profit Margins Raises Concerns

Coupang's Anticipated Disappointment, but 1P's Trouble Makes Us More Worried

CPNG: 1Q21 - Revenues Soar, Losses Deepen

Global TMT analyst with Asia ex-Japan focus.

Mitchell Kim

Equity Bottom-Up

<p>Coupang reported its quarterly earnings for the first time since its IPO on 11 March 2021.  The stock lost USD5 billion in market value in the subsequent trading session.  I offer three reasons why the stock fell even though the revenue growth of 74% met the consensus forecast (my estimate was much higher): </p><ol>
<li>Management's admission that strong revenue growth was against the COVID-19 stimulated demand in 1Q20 (again helped by the stronger won).  Comparing 2Q21 to 4Q21 against the even stronger revenue growth quarters -- 2Q20 to 4Q20 -- will be more challenging.  (Please refer back to my initiation report, <a href="https://www.smartkarma.com/insights/coupang-cpng-us-going-mano-e-mano-with-jd-com" target="_blank" data-smartkarma-citation="insights:49065" rel="noopener">Coupang (CPNG US): Going Mano E Mano with JD.com</a>.) </li>
<li>Active customer growth slowed in 1Q21.  While the revenue per customer increased by 44%, it is decelerated from 59% YoY growth in 4Q20 by my estimate.   </li>
<li>Operating losses expanded nearly 4x (3x excluding the IPO-related costs), weakening the management's argument that operating leverage was improving.  I argue in my previous report that when revenue growth decelerates to 50-60%, the company has to demonstrate that profit is near.     </li>
</ol><p>With the stock trading at 2.7x EV/Revenue compared to <a href="https://www.smartkarma.com/entities/jd-com-inc-adr" target="_blank" data-smartkarma-citation="entities:446:1" rel="noopener">JD.com Inc (ADR) (JD US)</a>'s 0.6x FY21, there is further downside risk, in my view.  </p>

Coupang reported its quarterly earnings for the first time since its IPO on 11 March 2021.  The stock lost USD5 billion in market value in the subsequent trading session.  I offer three reasons why the stock fell even though the revenue growth of 74% met the consensus forecast (my estimate was much higher): 
Management's admission that strong revenue growth was against the COVID-19 stimulated demand in 1Q20 (again helped by the stronger won).  Comparing 2Q21 to 4Q21 against the even stronger revenue growth quarters -- 2Q20 to 4Q20 -- will be more challenging.  (Please refer back to my initiation report, Coupang (CPNG US): Going Mano E Mano with JD.com.) 
Active customer growth slowed in 1Q21.  While the revenue per customer increased by 44%, it is decelerated from 59% YoY growth in 4Q20 by my estimate.   
Operating losses expanded nearly 4x (3x excluding the IPO-related costs), weakening the management's argument that operating leverage was improving.  I argue in my previous report that when revenue growth decelerates to 50-60%, the company has to demonstrate that profit is near.     
With the stock trading at 2.7x EV/Revenue compared to JD.com Inc (ADR) (JD US)'s 0.6x FY21, there is further downside risk, in my view.  

Coupang

Coupang (CPNG US): Crack in the Armor