Coupang, Inc. (CPNG): A Billionaire's Favorite Stock for Long-Term Growth

Coupang, Inc. (CPNG) has caught the attention of billionaire investors, including Stanley Druckenmiller, who holds a significant stake in the company. With its strong fundamentals, innovative business model, and undervalued stock price, Coupang presents an attractive opportunity for long-term investors. In this article, we will explore the reasons behind billionaires' interest in Coupang and discuss the company's growth prospects, valuation, and potential risks.



Billionaire Investors' Interest in Coupang

Billionaire investors like Druckenmiller have identified several compelling aspects of Coupang's business model and growth prospects that make it an attractive investment opportunity. Some of these factors include:

1. Market Leadership and Growth Potential: Coupang is the largest e-commerce company in South Korea, with a market share of nearly 25% (Statista, 2022). The company is expanding into Taiwan, indicating strong international growth potential. South Korean e-commerce is expected to grow at a 19% CAGR through 2029 (Mordor Intelligence).
2. Investment in Logistics and Infrastructure: Coupang has invested heavily in logistics, enabling it to handle fulfillment, inventory storage, and shipping for its clients, ensuring quick product delivery. This investment in infrastructure allows Coupang to differentiate itself from competitors and maintain a competitive edge.
3. Rocket WOW Subscription Service: Rocket WOW is a subscription service offering free shipping, grocery delivery, 30-day returns, and a streaming service, among other benefits. The number of Rocket WOW subscribers grew by 27% to over 14 million in 2023, indicating the service's popularity and potential for recurring revenue.
4. Strong Revenue Growth: In the first quarter of 2024, Coupang's revenue grew by 23% year over year, outpacing the 18% growth rate from the previous year. This consistent revenue growth demonstrates the company's ability to execute and expand its business.
5. Undervalued Stock: Coupang's P/S ratio fell to just above 1 in January 2025 and stands at 1.6, which is lower than its competitors like MercadoLibre (P/S of 5.8) and Sea Limited (P/S of 3.1). This lower valuation may present an attractive entry point for investors seeking long-term growth potential.

Coupang's Valuation and Growth Trajectory

Coupang's valuation, as measured by its price-to-sales (P/S) ratio, is significantly lower than that of its peers in the e-commerce and internet retail sectors. This lower valuation presents an opportunity for investors to buy into the company's growth at a substantial discount relative to its peers. However, it is essential to consider the reasons behind this lower valuation. Coupang operates primarily in South Korea and Taiwan, which have smaller populations and addressable markets compared to MercadoLibre and Sea Limited. This smaller market size may limit Coupang's growth potential and contribute to its lower valuation. Additionally, Coupang's focus on e-commerce may expose it to more competition and market fluctuations compared to Sea Limited, which has diversified its revenue streams.

Coupang's growth trajectory could be affected by regional economic conditions and competitive dynamics in South Korea and Taiwan. The company's focus on the South Korean market makes it more susceptible to economic fluctuations in the region. However, its expansion into Taiwan provides some diversification. Coupang's competitive position in both markets could be challenged by competitors like NAVER Shopping in South Korea and Sea Limited in Taiwan. To maintain its market lead and adapt to changing conditions, Coupang must continue to innovate and execute on its business strategy.

In conclusion, Coupang's strong fundamentals, innovative business model, and undervalued stock price have attracted the attention of billionaire investors. While the company's lower valuation presents an opportunity for long-term investors, it is essential to consider the potential risks associated with its smaller addressable market and focus on e-commerce. By carefully evaluating these factors, investors can make an informed decision about whether to invest in Coupang stock.