7. Coupang, Inc. (NYSE:CPNG)
Number of Hedge Fund Holders: 62
Coupang, Inc. (NYSE:CPNG) is an e-commerce company based in Seoul, South Korea, that sells beauty, skincare, snacks, electronics, and clothing items on its platform, Coupang Marketplace. The online retail company has a solid presence in South Korea, with a market share of 25%.
Coupang’s e-commerce infrastructure is noteworthy. The company has more than 100 unique fulfillment centers that meet the needs of 70% of the South Korean population living within a 7-mile radius. The company has a growing fleet of electric vehicles, Coupang Cars, that enable faster deliveries, accounting for 50% of the company’s fleet in Jeju, South Korea.
Technology is central to the company’s success. Coupang, Inc. (NYSE:CPNG) uses artificial intelligence to enable fast deliveries, manage volume order production, and implement system coordination. Its factories are automated so that items are delivered to workstations within 2 minutes or less, reducing employee workload by 65%.
Coupang’s e-commerce revenue increased by 13% year-over-year and active customers by 12% in the fiscal second quarter of 2024. Apart from its strong e-commerce infrastructure, Coupang’s (NYSE:CPNG) plethora of membership and loyalty programs with various benefits make it a customer favorite, evident from its 21 million strong customer base. While the company continues to experience customer growth, its priority lies in retaining existing customers.
Coupang’s (NYSE:CPNG) competitive edge lies in its efficiency gains and customer retention which can be attributed to its increasing investment in technology, automation, and customer benefits.
Analysts are bullish on CPNG and their 12-month median price target of $26.5 points to a 16% upside from current levels. Overall, 62 investors were bullish on the stock at the end of Q2 2024, with total stakes amounting to $4.3 billion. As of June 30, Maverick Capital was the largest shareholder with a position worth $612.85 million.
Baron Funds stated the following regarding Coupang, Inc. (NYSE:CPNG) in its first quarter 2024 investor letter:
“We also added to our position in the Korean e-commerce platform, Coupang, Inc. (NYSE:CPNG), as the company continues to execute at a high level, reporting strong financial results, with accelerating revenue growth – revenues were up 20% year-over-year in constant currency in the fourth quarter, 29% excluding the impact from Coupang’s Fulfillment and Logistics accounting change, driven by growth in its number of customers count (up 16% year-over-year), growth of its loyalty Wow members (up 27% year-over-year) and growth in spending by existing cohorts (with every cohort, including those who have used the platform for a long time, growing at least 15% year-over-year), which suggests continued wallet share gains for the company. While Coupang continues to gain market share, its attractive unit economics are beginning to appear in results, with adjusted EBITDA margins of its commerce segment reaching 7.1% in the fourth quarter (up 190bps year-over-year). Coupang is utilizing the growing profits from commerce to invest in emerging offerings such as Fulfillment and Logistics by Coupang (FLC), expansion into Taiwan (with revenues up 2 times in the last six months) and Coupang Eats, its food delivery network, which saw order volume increase by 2 times as well in the last nine months. In the last week or so, Coupang also announced a material 58% Wow membership price hike, which should flow through nicely to the bottom line, sending the stock higher by close to 20%.”
