Coupang Anticipates Profit Turnaround in Distribution Sector... Will the Halved Stock Price Rebound?

Stock Price Decline Despite Strong Performance
Q1 Trading Volume Expected to Increase Over 30% This Year
Performance Improvement Anticipated with Reduced Cost Burden in Second Half

[Asia Economy Reporter Minji Lee] Despite recording solid performance in the fourth quarter of last year, Coupang is experiencing a significant decline in its stock price. Securities experts expect the company to deliver strong results this year as well, given the anticipated turnaround to profitability in its distribution sector.

On the 6th, Coupang's stock price stood at $21.10, down 17% compared to the previous trading day as of the 4th (local time). After announcing favorable results following the market close on the 2nd (local time), the stock price rose slightly the next day but then sharply declined, presumably due to shrinking investor sentiment amid external uncertainties.

Coupang posted revenue of $5.08 billion in the fourth quarter of last year, marking a 34% increase compared to the same period the previous year. Operating losses amounted to $400 million, with losses widening during the same period. The operating loss margin was 8.8%. Revenue met market expectations, with active customers and average order value increasing by 21% and 11%, respectively.

Researcher Eunjeong Park from Samsung Securities analyzed, “Since the third quarter of last year, the growth of the online shopping market has begun to stagnate with the start of 'With Corona' consumption, leading to a slowdown in the company's average order value growth. However, the increase in average order value quarter-over-quarter and the high growth rate of active customers suggest that quality revenue growth has continued.” Operating profit fell short of market expectations due to decreased productivity at logistics centers caused by delivery workforce shortages and increased labor costs related to COVID-19 response measures.

The company projected that transaction volume in the first quarter of this year will grow by more than 30%. Furthermore, it stated that the cost burdens that suppressed performance in the second half of last year could ease rapidly. The company expects the distribution division (including advertising) to turn EBITDA positive in the fourth quarter of this year. Researcher Myungjoo Kim from Korea Investment & Securities said, “Coupang is expected to reduce losses this year by expanding marketplace sales through strengthening its advertising business and fulfillment services.”

However, early-stage businesses such as Coupang Eats, Coupang Play, overseas operations, and fintech are expected to continue running deficits, maintaining an overall negative EBITDA trend. According to the long-term guidance, the gross profit margin, which was 16.9% last year, is expected to improve to between 27% and 32%, leading to an EBITDA margin increase from 4.1% last year to 7-10% or higher.

Coupang's stock price has continued to decline since its listing, as it has not shown clear results in expanding business areas beyond distribution. However, there are opinions that valuation will be justified through improved performance this year. Researcher Myungjoo Kim explained, “With the visible results of cross-border fulfillment, which began to expand in earnest from the second half of last year, Coupang's retail market expansion will commence. The expansion of new businesses using the platform and retail market growth are factors that justify Coupang's valuation.”

This content was produced with the assistance of AI translation services.