Coupang (NYSE:CPNG), South Korea’s Amazon (NASDAQ:AMZN) and Shopify (NYSE:SHOP) clone, volition apt astonishment with its first-quarter net connected May 10. This could propulsion CPNG banal adjacent higher, contempt its mediocre show since its aboriginal March IPO.
Coupang stock has risen 20% from its IPO terms of $35.00. But since March 11, erstwhile it closed astatine $49.25, CPNG banal has slid $7.35, oregon 15% to $41.90, arsenic of April 30.
The Motley Fool precocious wrote astir Coupang arsenic being similar some Amazon and Shopify. Coupang allows 3rd parties to acceptable up online storefronts connected its site, on with fulfillment provided by Coupang. Shopify is starting to supply fulfillment services for its online merchants, conscionable similar Amazon does present with its third-party FBA services (Fulfillment by Amazon).
Last twelvemonth Coupang’s income grew 90.8% to $11.967 cardinal from $6.27 billion. Its Q4 gross was up 93% to $3.8 billion. Analysts expect $4.29 cardinal successful gross for Q1, up 12.8% implicit Q4. Page 99 of the company’s prospectus indicates that its Q1 2020 gross was $2.413 billion. This implies that the Q1 gross estimates if they are hit, volition beryllium 77.8% higher than a twelvemonth ago.
Right now, Coupang has a steadfast $71.9 cardinal marketplace capitalization. But the banal is really rather cheap. According to expert estimates, it trades astatine conscionable 3.8 times forecast $18.9 cardinal successful gross for 2021. And for 2022, CPNG banal is astatine conscionable 2.7 times its forecast $26.59 cardinal successful forecast sales.
Valuation of Coupang Stock
That leaves plentifulness of country for the banal to rise. For example, Amazon trades astatine 3.57 times 2021 gross forecasts and 3.04 times 2022 revenue. These are higher than Coupang’s valuation.
For example, astatine 3.04 times Coupang’s 2022 gross forecast of $26.59 cardinal successful 2022 sales, CPNG banal would person a marketplace capitalization of $80.83 billion. This is 12.4% supra its $71.9 cardinal marketplace cap. This means that the CPNG banal people is $47.11 per share.
Moreover, Shopify trades astatine 33.5 times 2021 income estimates and 25.3 times 2022 sales. In different words, since Coupang is similar some companies, it deserves to person a Price-to-Sales (P/S) aggregate determination betwixt 3 times and 25 times sales.
For example, conservatively valued astatine 5 times 2022 sales, it would beryllium worthy $133 billion, oregon 84.9% supra today’s price. That gives CPNG banal a people terms of $77.47 per share.
Where This Leaves CPNG Stock
Not each quality related to Coupang is glorious. The Financial Times (subscription required) precocious reported that Coupang is being accused by assorted radical successful South Korea for severely overworking immoderate of its employees. A fig of its young radical person died from bosom attacks that relatives person said were owed to overwork.
The FT nonfiction besides described however the families are having difficulties getting Coupang to admit this cause. Nevertheless, it was recovered handing retired envelopes of currency astatine assorted funerals. This is really an important nonfiction since Coupang is by acold the country’s largest e-commerce institution and its third-largest employer.
Barron’s wrote connected April 7 that J.P. Morgan (NYSE:JPM) had begun sum of CPNG stock with conscionable a Neutral standing but besides a $48 terms target. The bully quality is that represents a summation of 15%, though this is acold abbreviated of my $77.47 terms people and 85% upside.
Tipranks.com indicates that the mean people terms of 6 analysts’ reports connected CPNG banal successful the past 3 months is $50.50 per share. This represents a imaginable summation of 20.5% implicit today’s terms (as of April 30) of $41.90.
Keep successful caput that astir analysts’ targets are for the adjacent 12 months. My 84.9% upside people could instrumentality up to 2 years to hit. In that regard, it would mean that the mean yearly instrumentality would beryllium 36% annually connected a compound mean yearly basis. That is simply a decent instrumentality for astir people.