Online retailer Coupang failed to meet Wall Street’s expectations
Last week, South Korean online retailer Coupang Inc. (CPNG) reported quarter results that were lower than Wall Street analysts had predicted. This led to a decrease in quotations at the auction on March 4 by over 17%. Trading on March 7, CPNG stock adjusted to $19.72.
Online retailer Coupang operates in South Korea, but the company also has plans to penetrate the market of Singapore, Japan and Malaysia. The difficulty lies because each of these regions differs from the others. For example, Singapore is a small country in terms of population (less than 6 million people), but with active young urban residents.
Japan is a country with a population of over 126 million people, which is a big promising market. Plus, this country also has a developed urban consumer culture. In the fourth quarter, Coupang’s revenue grew by 34% to $5.1 billion, which was below analysts’ expectations. The loss figures also fell short of forecasts: net losses increased to $405 million, and net loss per share was $0.23.
The company itself noted they faced a shortage of capacity, as they were building up their platform in 2021 against the background of growing demand. In addition, labor shortages also held back growth, reducing gross margins. According to Coupang, gross profit is on the way to consistent improvement.
The company’s core e-commerce business is already profitable, and company-wide losses with rapid growth initiatives such as Eats (restaurant delivery), Play (video streaming), as well as financial technology and international growth initiatives.
Thus, starting from the next quarter, the company plans to divide the main profitable segment and new initiatives. This means that investors will receive clearer information about the activities of Coupang. Perhaps this will have a positive effect on the quotes. The stock is trading almost 70% below 52-week highs.
