Coupang’s actions are increasing after hours after its last profits.
The actions of technology, cryptocurrency and artificial intelligence (AI) fell in February. Coupang (Cpng 0.04%))On the other hand, this trend has largely shaken. In addition to reporting impressive growth for the fourth quarter of 2024 after closing the markets on Tuesday, the company extended to financial technology, new markets such as Taiwan, and food delivery leads to solid growth for the platform.
The good news is that there is potentially a lot of growth for the company which has just exceeded $ 30 billion in annual income. However, from the end of Thursday’s market, the action fell 2.6% during the two days since the press release. Most likely, the market underestimates the actions of Couang. Here is why.
Impressive in all areas
By deepening the gains report, Coupeng has published solid results in all areas. For the fourth quarter, revenues increased by 21% from one year to the next to 8 billion dollars, both on a biological basis and in foreign currencies. Coupang operates mainly in South Korea, but has its headquarters in the United States and reports in US dollars, and can see the main rear winds or opposite winds depending on the currency movements. Recently, he also acquired the Farfetch luxury platform, resulting in an increase in income growth.
The gross profile growth seems even more impressive, up 48% of one year on the other and still up 29% if you exclude Farfetch and insurance payment for warehouse fire. The gross margin adjusted, a measure which focuses on basic profitability by removing non -recurring or non -operational items, came to 29%, compared to 25% a year ago. It is a sign of a company that is not only growing, but growing profitable.
While the main investments in the development of new offers have seen the Net income from Couang fall at $ 131 million, the cash flows available for the full year came to $ 1 billion, which means that the company can finance the self-funding with its own assessment. It is a solid sign of a healthy business.
Speaking of offers development, the growth of this division – which includes international electronic commerce, financial technology and food delivery – increased more than 300% income from one year to the next (136% from one year to the next if you exclude the boost from Farfetch income). This division already achieves $ 1.1 billion in quarterly income and increases at a rapid pace, becoming a larger part of the coupang company over time.
More growth in advance of existing customers
The segment of development offers seems promising, but do not forget the basic market of electronic commerce in South Korea, which still seems quite healthy. According to slides to the company’s profits, customers who joined Coung more than six years ago still increase their expenses on the market, with new customers who have joined this year to start at higher spending levels.
This is a fantastic news for coupang shareholders and indicates that more growth is in advance for existing coupeng customers. Based on foreign currency, expenditure per active client increased by 6% from one year to the next during the period. If these new cohorts act as older cohorts, there will be many years of growth in expenditure by active customer.
Oh, and COUTANG always adds new active customers each year. Total active customers increased by 10% over one year to 22.8 million in the fourth quarter of 2024.
CPNG Treasury flow available data by Ycharts.
Why is the coupang stock always cheap
In the long term, Couang estimates that it can reach an adjusted profit margin of 10%. Although the adjusted figures are not always indicative of real profitability, I think that the coupang can be reliable, given its effective and high operations available cash flow Generation while it always reinvests for growth.
In addition, as he receives money from customers before paying his electronic commerce suppliers, he has an excellent working capital cycle that helps raise available cash flows.
All that being said, I think that the margin of available cash flow from coung can reach 10% or more because the company continues to mature. With $ 30 billion in annual income despite the main opposite winds in foreign currency, Coupang can easily exceed $ 50 billion in revenues in the coming years, due to all the growth factors mentioned above. On a margin of 10%, more than $ 5 billion in cash flow available annual.
Coupang’s market capitalization is just under $ 43 billion, or only 9x of available cash flows, the action seems underestimated. It is for a company that increases its gross profit by almost 30% from one year to the next, and with a development segment that exceeded 100% from one year to the next. Yes, I still believe that the market underwear the actions of Couang after this profits population. It is a manufacturing technology giant and a purchase for investors today.