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Consumer Discretionary / Industrials

Henry Kwon

Equity Bottom-Up

<p>CPNG's business model is based on speedy delivery to its customers with a focus on top line growth. Margin deterioration in 1Q21 should be understandable given that room for further individual employee productivity improvements at this point is likely to be little. Questions regarding CPNG's cost pressures and the ability to expand margins is likely to linger in the back of investors' minds, however, so 2Q earnings is likely to become a focal point on this issue.</p><p>Since June 1, CPNG's shares have declined by 8.55% while the S&amp;P 500 has risen by 0.42%, underperforming the index by 8.96% in the same time frame. After declining to an intra-day low of $30.65 on May 13, CPNG initially broke above its 78.6% Fibonacci retracement level of $38.86 on May 24 but failed to reach its 61.8% retracement of $45.30. It has currently retreated to below the 78.6% retracement level. Given CPNG's short listing history, charting technical support/resistance levels represents a challenge, but a close above $39.00 would be constructive in the short term.</p>

CPNG's business model is based on speedy delivery to its customers with a focus on top line growth. Margin deterioration in 1Q21 should be understandable given that room for further individual employee productivity improvements at this point is likely to be little. Questions regarding CPNG's cost pressures and the ability to expand margins is likely to linger in the back of investors' minds, however, so 2Q earnings is likely to become a focal point on this issue.Since June 1, CPNG's shares have declined by 8.55% while the S&amp;P 500 has risen by 0.42%, underperforming the index by 8.96% in the same time frame. After declining to an intra-day low of $30.65 on May 13, CPNG initially broke above its 78.6% Fibonacci retracement level of $38.86 on May 24 but failed to reach its 61.8% retracement of $45.30. It has currently retreated to below the 78.6% retracement level. Given CPNG's short listing history, charting technical support/resistance levels represents a challenge, but a close above $39.00 would be constructive in the short term.

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