• Brett Schafer

Deep Dive: Coupang

Listen On:

  1. Spotify

  2. Apple Podcasts

  3. What do they do? Coupang is an e-commerce company based in South Korea. They also own a logistics network, a food and grocery delivery service, a fintech service, and many other business lines. The majority of Coupang’s business is e-commerce though.

  4. History? Bom Suk Kim dropped out of Harvard to found Coupang in 2010. Originally, it was like a Groupon but in South Korea, but they decided to pivot and go with the strategy they have today.

  5. Industry? There was $128 billion in e-commerce spend in South Korea in 2019 (the only company Coupang currently operates in ). Competitors include Gmarket, WeMakePrice, and Naver Shopping.

  6. Management? Founder Bom Suk Kim is still CEO. He owns the majority of the voting rights to the company through his class B shares.

  7. Valuation? (As of recording) Market cap of $72 billion, P/S of 6, P/GP of 36.

  8. Earnings? $12 billion in 2020 sales, up 91% YoY. Generated $300 million in operating cash flow last year.

  9. Balance Sheet? Minimal LT debt but a solid amount of contract liabilities. Will have around $6 billion in cash post-IPO to put into building out the logistics network.

  10. Potential Competitive Advantages? We had the logistics network, economies of scale, and the fact they are connected to the South Korean political system.

  11. Potential Future Growth Opportunities? We had international expansion, Coupang Pay, and the demographics of South Korea.

  12. Highlights? Kim seems Bezos-Esque with his relentlessness, growth in market share in South Korea, focusing on Free cash flow.

  13. Lowlights? Was hard to find, but the concern were mainly that South Korea is a relatively small market.

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Disclosure: The authors and podcast guests are not financial advisors. Brett Schafer and Ryan Henderson are portfolio managers at Arch Capital. Clients of Arch Capital may hold securities discussed on this podcast.

#Coupang #CPNG

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