Invest in Coupang Stock to Profit From the Next Amazon -
Coupang is not a household name in the United States. But the company is making waves in the digital world. Keep in mind that — over the past few years — various top firms have agreed to invest in Coupang stock, which is valued at a hefty $9 billion.
The company, which is the leading e-commerce operator in South Korea, was founded by Bom Kim in 2010. At the time, he dropped out of the Harvard University MBA program because he saw a massive opportunity in the country.
In an interview with CNBC, Kim noted that “I had a belief when I was in grad school that I had a very short window to really make something that had an impact.”
Keep in mind that Coupang has undergone various pivots. For example, it initially was about capitalizing on the red-hot category of daily deals. Remember Groupon (NASDAQ:GRPN)? Well, the trend was more of a fad.
So Coupang adapted its business model. The next focus was to create a marketplace where third parties would sell their wares. It was similar to eBay (NASDAQ:EBAY) or Alibaba (NYSE:BABA).
While this did get traction, Kim though there was an even better way. Yes, he would look to the Amazon (NASDAQ:AMZN) playbook. This involved heavy investments in building an extensive infrastructure distribution system. At the core of this was building Rocket Delivery, which provides direct shipments to customers.
For the most part, this strategy has proved to be spot on. It certainly helps that over 80% of South Korea’s population resides in high-density cities. Another key factor is that the citizens are adept with new technologies and that there is a sophisticated broadband infrastructure.
True, South Korea is not necessarily a large country. But there is something to keep in mind: It is one of the largest e-commerce markets in the world. And Coupang is the clear leader in the country, beating out operators like Gmarket and 11Street. Every day it delivers 3.3 million items and roughly half of the population of South Korea has downloaded the mobile app.
The pandemic has had an impact on the company. However, South Korea has done a good job of containing the virus. As for Coupang, it has retooled its supply chain and provided incentives for customers. All in all, the moves have paid off.
According to a report from Reuters, the company posted revenues of 7.2 trillion won in the first quarter, up by 64% on a year-over-year basis. The operating loss fell from 1.1 trillion won to 721 billion won during this period. The two main growth drivers have been groceries and appliances.
Coupang has certainly benefited from the boom in private investing in high-growth startups. Since inception, the company has snagged a total of $3.6 billion from tier-one investors like Sequoia Capital and BlackRock (NYSE:BLK). However, the biggest shareholder is SoftBank (OTCMKTS:SFTBY) and its Vision Fund. The total amount invested is $3 billion.