Coupang Inc

Coupang, Inc. (NYSE: CPNG) owns and operates an e-commerce business, which primarily serves the Korean retail market. Through its mobile applications and Internet Websites, the Company offers products and services that span a range of categories, including home goods and decor, apparel and beauty products, fresh food and grocery, sporting goods, electronics, everyday consumables, travel, restaurant order and delivery, content streaming, and advertising. It operates through two segments: Product Commerce and Developing Offerings.

Recent Financial and Business Updates:

Q2 2023 Notable Financial and Operational Achievements

Overall Performance:

• Net revenues reached USD 5.8 billion, signifying a 16% year-over-year increase on a reported basis and a significant 21% increase on an FX-neutral basis.
• The growth rate in revenue would have been roughly 300 basis points higher than the 21% growth rate if not for the accounting change in FLC revenue, now recorded on a net basis starting from Q2 2023.
• Gross profit surged by 32% year-over-year, amounting to USD 1.5 billion.
• Gross profit margin displayed a notable improvement, standing at 26.1%, which reflects a 320 basis points increase year-over-year. The accounting alteration in FLC revenue this quarter had a positive impact of 100 basis points.
• Net income amounted to USD 145 million, yielding a margin of 2.5%, indicating a noteworthy improvement of USD 221 million compared to the previous year.
• Adjusted EBITDA stood at USD 300 million, with a margin of 5.1%, showcasing a significant improvement of 380 basis points over the previous year.
• Earnings per share (EPS) reached USD 0.08, indicating a notable increase of USD 0.12 year-over-year.
• Operating cash flow for the trailing twelve months surged to USD 2.0 billion, marking a substantial increase of USD 2.3 billion compared to the previous year.
• Free cash flow for the trailing twelve months amounted to USD 1.1 billion, reflecting a remarkable increase of USD 2.2 billion year-over-year.
• Active customer growth demonstrated a solid increase, standing at 10% year-over-year, with a total of 19.7 million active customers.

Segmental Highlights:

• Net revenues for the Product Commerce segment reached USD 5.7 billion, reflecting a 16% year-over-year increase on a reported basis and a substantial 21% increase on an FX-neutral basis.
• Adjusted EBITDA for the Product Commerce segment amounted to USD 408 million, showcasing a substantial increase of USD 310 million year-over-year.
• The adjusted EBITDA margin for the Product Commerce segment exhibited a notable improvement, reaching 7.2%, reflecting a substantial increase of 520 basis points year-over-year.
• In contrast, the Developing Offerings segment (comprising International, Coupang Eats, Play, and Fintech) reported a negative adjusted EBITDA of USD 107 million.
  

Technical Observation (on the daily chart)

Currently, the stock is currently near an important resistance level of USD 20.00-USD 22.00, after giving a break due to Q2FY23 results announcement. A retracement and retest of USD 17 levels is expected before a move towards upside. The RSI (14 period) momentum indicator is at an overbought value of 70.44, with expectations of further consolidation or a short-term correction. Moreover, the price is currently positioned above both the 21-day SMA and 50-day SMA trend-following indicators, which may act as dynamic short-term support levels respectively. 

As per the above-mentioned price action, recent key business and financial updates, momentum in the stock over the last month, expectations of results announcement, and technical indicators analysis, a ‘Watch’ rating has been given to Coupang, Inc. (NYSE: CPNG) at the current market price of USD 19.38 as of August 09, 2023, at 09:30 am PDT.

Individuals can evaluate the stock based on the support and resistance levels provided in the report in case of keen interest taking into consideration the risk-reward scenario. 

Markets are trading in a highly volatile zone currently due to certain macro-economic issues and prevailing geopolitical tensions. Therefore, it is prudent to follow a cautious approach while investing. 

Related Risk: This report may be looked at from a high-risk perspective and a recommendation is provided for a short duration. This report is solely based on technical parameters, and the fundamental performance of the stocks has not been considered in the decision-making process. Other factors which could impact the stock prices include market risks, regulatory risks, interest rates risks, currency risks, social and political instability risks etc. 

How to Read the Charts?

The Green colour line reflects the 21-period simple moving average (SMA) while the red line indicates the 50- period simple moving average (SMA). SMA helps to identify existing price trends. If the prices are trading above the 21-period and 50-period moving average, then it shows prices are currently trading in a bullish trend.

The Black colour line in the chart’s lower segment reflects the Relative Strength Index (14-Period) which indicates price momentum and signals momentum in trend. A reading of 70 or above suggests overbought status while a reading of 30 or below suggests an oversold status.

The Blue colour bars in the chart’s lower segment show the volume of the stock. The volume is the number of shares that changed hands during a given day. Stocks with high volumes are more liquid than stocks with lesser volume as liquidity in stocks helps with easier and faster execution of the order.

The Orange colour lines are the trend lines drawn by connecting two or more price points and used for trend identification purposes. The trend line also acts as a line of support and resistance.

Technical Indicators Defined: -

Support: A level at which the stock prices tend to find support if they are falling, and a downtrend may take a pause backed by demand or buying interest. Support 1 refers to the nearby support level for the stock and if the price breaches the level, then Support 2 may act as the crucial support level for the stock. 

Resistance: A level at which the stock prices tend to find resistance when they are rising, and an uptrend may take a pause due to profit booking or selling interest. Resistance 1 refers to the nearby resistance level for the stock and if the price surpasses the level, then Resistance 2 may act as the crucial resistance level for the stock. 

Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices. 

The reference date for all price data, currency, technical indicators, support, and resistance levels is August 09, 2023. The reference data in this report has been partly sourced from REFINITIV. 

Abbreviations

CMP: Current Market Price

SMA: Simple Moving Average

RSI: Relative Strength Index

USD: United States dollar 

Note: Trading decisions require a thorough analysis by individual. Technical reports in general chart out metrics that may be assessed by individuals before any stock evaluation. The above are illustrative analytical factors used for evaluating the stocks; other parameters can be looked at along with additional risks per se. Past performance is neither an indicator nor a guarantee of future performance.