Down More Than 20% in the Past Month, is Now the Time to Scoop Up Shares of This E-Commerce Stock?

Headquartered in the capital city of Seoul, this company is the largest e-commerce company in South Korea and is an up-and-coming rival of global e-commerce mammoths, Inc. (AMZN) and…

Alibaba Group Holding Limited (BABA). As one of the fast-growing companies globally, Coupang, Inc. (CPNG – Get Rating) was ranked #2 in the 2020 CNBC Disruptor List.

CPNG completed its overseas IPO listing on the NYSE on March 11. The stock opened at $63.50 during its first trading session, 81.4% higher than the pre-listing price of $35. However, the stock has declined 39.8% since then, driven by weakening investor sentiment regarding its international expansion prospects and weak profit margins. Following the release of the mixed fiscal second-quarter earnings report (for three months ended June 30) on August 11, shares of CPNG declined 17.9% to close Friday’s trading session at $29.65. It has slumped 23.6% over the past month.

Here’s what could shape CPNG’s performance in the near term:

Strong Business Model

CPNG has been dubbed as South Korea’s “Amazon,” as it controls 24.6% of the country’s market share (as of last year). The company’s wholly-owned logistics delivery system, Rocket Delivery, has played a vital role in its accelerated growth within a decade of its inception in 2010. It currently delivers approximately 3.3 items per day, up 50% from the end of 2019. Furthermore, 99.3% of orders placed through the CPNG site are delivered within one day, as 70% of Koreans live within 10 minutes of a Coupang logistics center. Thus, it is one of the most valuable start-ups in South Korea.

Intense Competition

CPNG has demonstrated remarkable growth over the next decade to become a household name in South Korea. However, the company is yet to venture into international markets. While the ADR listing on NYSE has created brand awareness in the United States, it is yet to commence operations in the west. In addition, the company faces immense competition from AMZN, the world’s largest e-commerce retailer, controlling 7.7% of the global market share.

In addition, despite being a leading e-commerce platform…

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