Key Takeaways:
- The 2-Minute Valuation Model values Coupang stock at $34 per share in 2 years.
- That’s a potential 26% upside from today’s price of $27 per share, which would signify about 12% annual returns over the next two years.
- CPNG stock is projected to grow EPS by an extraordinary 314% over the next 3 years.
- The company is demonstrating operational leverage as it scales from heavy investment to profitability.
- Get accurate financial data on over 100,000 global stocks for free on TIKR >>>
Valued at a market cap of $49 billion, Coupang (CPNG) has established itself as South Korea’s leading e-commerce platform.
Coupang is often called the “Amazon of Korea” for its comprehensive marketplace, logistics network, and customer-centric approach.
The company operates a unique end-to-end logistics model that enables same-day and next-day delivery across South Korea, while expanding into adjacent markets including Taiwan and Southeast Asia.
With CPNG stock now trading at $27 per share, investors are witnessing a remarkable transformation story as Coupang evolves from a high-growth, loss-making company to a profitable e-commerce powerhouse.
Despite its impressive operational improvements and path to sustained profitability, the tech stock trades at reasonable valuations relative to its growth prospects.
Let’s analyze whether Coupang presents an attractive investment opportunity today.
Find the best stocks to buy today with TIKR. (It’s free) >>>
What is the 2-Minute Valuation Model?
Three core factors drive a stock’s long-term value:
- Revenue Growth: How big the business becomes.
- Margins: How much the business earns in profit.
- Multiple: How much investors are willing to pay for a business’s earnings.
Our 2-Minute Valuation Model uses a simple formula to value stocks:
Expected Normalized EPS * Forward P/E ratio = Expected Share Price
Revenue growth and margins drive a company’s long-term normalized earnings-per-share (EPS), and investors can use a stock’s long-term average P/E multiple to get an idea of how the market values a company.
Why Coupang Stock Looks Undervalued
Forecast
Based on analyst estimates in the EPS chart below, Coupang is expected to deliver extraordinary earnings growth as the company transitions from investment mode to sustained profitability:
EPS is projected to expand from $0.22 in 2024 to $0.91 by 2027, representing a 314% increase over the next three years.
Like other tech companies, Coupang is asset-light and should benefit from higher operating leverage at scale.
This earnings growth for CPNG stock is likely to be driven by:
- Operational leverage: As Coupang’s revenue grows, its massive investments in logistics infrastructure, technology, and fulfillment centers are beginning to generate substantial returns to scale.
- Market share expansion: Coupang continues to gain traction in South Korea’s e-commerce market, benefiting from its superior logistics network and customer experience.
- International expansion: The company’s expansion into Taiwan and other Southeast Asian markets provides new avenues for growth beyond the South Korean market.
- Advertising revenue growth: Coupang’s advertising platform is becoming increasingly valuable to merchants, providing high-margin revenue that scales with transaction volume.
- Margin improvement: The company is demonstrating its ability to improve margins through operational efficiency, pricing optimization, and reduced customer acquisition costs.
For our valuation, we’ll estimate that CPNG stock will reach $0.85 in EPS in 2027.
Check out Coupang’s full analyst estimates (It’s free) >>>
Valuation Multiple
Today, Coupang stock trades at around 70x forward earnings, below its 12-month historical average P/E of 74x, as shown in the valuation chart.
For our valuation, we’ll use a conservative forward P/E multiple of 40x. This is well below the company’s historical average but still acknowledges the business’s strong growth prospects.
Fair Value of CPNG Stock
Using our 2-Minute Valuation Model and applying a conservative approach:
- Conservative 2027 EPS estimate: $0.85
- Conservative forward P/E multiple: 40x
Expected Normalized EPS ($0.85) * Forward P/E ratio (40x) = Expected Share Price ($34)
The 2-year expected CPNG stock price we would get from this valuation is $34 per share.
With Coupang stock currently trading at around $27 per share, this implies a potential upside of 25% over the next two years or a 12% annualized return.
A 12% annual return might not sound exciting, but CPNG stock could certainly deliver higher returns. For instance, it can easily command a 50x earnings multiple, which means it could touch $43 over the next two years.
Remember, this is just a valuation exercise, and we don’t know for sure what the stock’s price will be in the future.
Value stocks quicker with TIKR (It’s free, no card required) >>>
What is the Average Analyst Price Target for Coupang Stock?
Wall Street analysts believe Coupang is undervalued at today’s price.
The average price target for CPNG stock is around $29 per share, suggesting about 7% upside from the stock’s current share price:
7% upside sounds pretty low, but we’ve touched on how the stock could trade at a higher price if it continues trading at a high multiple.
Risks to Consider
Despite the bullish outlook, investors should be aware of several risks that could impact the tech giant’s growth trajectory:
- Competitive pressure: Intensifying competition from local players and global platforms could pressure margins and market share.
- International expansion challenges: Success in new markets is not guaranteed, and global expansion requires significant investment with uncertain returns.
- Regulatory environment: Changes in e-commerce regulations or labor laws in South Korea could impact operations and costs.
- Economic sensitivity: A slowdown in consumer spending could affect e-commerce growth and profitability.
- Foreign exchange risk: Currency fluctuations could impact reported results for U.S. investors, particularly as international operations grow.
TIKR Takeaway
Coupang presents a compelling growth story at a reasonable valuation for investors seeking exposure to Asian e-commerce.
Through superior logistics and customer experience, it has successfully built a dominant position in South Korea’s e-commerce market and is now demonstrating its ability to convert that market leadership into sustainable profitability.
The stock’s appeal lies in its strong competitive advantages in a large, growing market and improving financial performance. Coupang’s end-to-end logistics network creates high barriers to entry, while its expanding advertising business provides high-margin revenue opportunities.
The projected 26% return over two years reflects Coupang’s impressive earnings growth trajectory and potential for multiple compression as the business matures.
Is CPNG stock a buy for contrarian value investors? Use TIKR to check the stock’s analyst price targets and growth forecasts to see if it is undervalued today.
Looking for New Opportunities?
- See what stocks billionaire investors are buying so you can follow the smart money.
- Analyze stocks in as little as 5 minutes with TIKR’s all-in-one, easy-to-use platform.
- The more rocks you overturn… the more opportunities you’ll uncover. Search 100K+ global stocks, global top investor holdings, and more with TIKR.
Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any stocks mentioned. Thank you for reading, and happy investing!
