Unpacking Coupang’s 28% Revenue Jump in Q1 2024

Coupang’s first quarter of 2024 demonstrated robust growth, driven by a focus on customer experience, operational excellence, and expanding service offerings. The company reported a 28% increase in revenue year-over-year in constant currency terms, slightly lower when adjusted for the acquisition of Farfetch and a change in Fulfillment and Logistics (FLC) accounting. Key growth drivers included an expanded customer base, with a notable 16% increase in product commerce active customers, and strong performance in new and developing segments like Rocket Fresh and FLC. These offerings helped boost sales and support small and medium-sized enterprises (SMEs). Coupang continues to invest heavily in infrastructure to enhance delivery capabilities and expand its market share in Korea’s fragmented $560 billion commerce market, as well as in Taiwan. Additionally, the integration of Farfetch into its developing offerings is underway, with expectations of reaching near-positive adjusted EBITDAUnderstanding Adjusted EBITDA: A Comprehensive Guide In the world of finance and business valuation, financial metrics play a crucial role in assessing a company's health, performa... More by year’s end.

On January 31, 2024, Coupang, Inc. declared the successful acquisition of Farfetch Holdings plc, a leading global online luxury company. This acquisition, backed by a capital injection of $500M, empowers Farfetch to maintain its stellar services for brand and boutique partners, as well as its vast customer base exceeding four million worldwide. Leveraging Coupang’s operational prowess and groundbreaking logistics, Farfetch is primed to embark on a trajectory of steady and strategic expansion.

Rocket Fresh: Revolutionizing Grocery Shopping

Coupang description of Rocket Fresh division: Rocket Fresh, the online grocer, caters comprehensively to all your grocery requirements, conveniently delivered in our innovative eco-friendly Fresh bags. Through the utilization of our expansive Rocket Delivery network and state-of-the-art cold-chain logistics technology, Fresh swiftly dispatches orders directly to customers’ doorsteps within mere hours. Offering an extensive array of fresh produce, including fruits, vegetables, meats, and an assortment of thousands of other items accessible at the tap of a button, Rocket Fresh redefines the ease and efficiency of grocery shopping for all.

Insights

• Coupang’s focus on customer experience and expanded service offerings is driving significant revenue growth.
• Investments in infrastructure are crucial for expanding market reach and enhancing delivery capabilities.
• Integration of acquisitions like Farfetch is critical to Coupang’s strategy to boost its developing offerings.

The Essence (80/20)

Understanding Coupang’s strategy involves focusing on:

1. Customer Experience: Continual enhancement of customer service standards and offerings.
2. Operational Excellence: Strengthening logistics and delivery infrastructure to support rapid growth.
3. Market Expansion: Penetrating new markets while deepening presence in existing ones, particularly with SME support.

The Action Plan

1. Enhance customer experience through innovative offerings and superior service levels.
2. Continue investing in logistics and technology to improve delivery speed and efficiency.
3. Expand market presence in Korea and Taiwan by leveraging local manufacturing and broadening the supplier base.
4. Integrate new acquisitions effectively to support growth in new business segments.

Blind Spot

Potential underestimation of competitive dynamics in rapidly changing retail environments, especially with new entrants in the market that can shift consumer preferences quickly.

Coupang (CPNG) Technical Analysis

Price Action and Moving Averages:

• The stock is currently in an uptrend as indicated by the price being above both the 50-day (blue line) and 200-day (red line) moving averages. The 50-day moving average is at approximately $20.19, and the 200-day is at about $17.74.
• Recent price action shows a bullish trend with the stock reaching higher highs. The current price as of the last data point is around $23.65.

Volume Analysis:

• There has been a notable increase in trading volume on days when the stock price increased, suggesting strong buying interest. The volume on the latest trading day was approximately 20.249 million shares.

Relative Strength IndexIn the world of technical analysis, the Relative Strength Index (RSI) stands as a cornerstone tool for traders seeking insights into market momentum. Developed by J. Welles Wilder ... More (RSI):

• The 14-day RSI is at 73.95, which is close to the overbought threshold of 75. This could indicate that the stock might be getting overvalued in the short term, suggesting a potential pullback or consolidation.

On-Balance VolumeThe On Balance Volume indicator (OBV) is a technical analysis tool used to measure the flow of money into and out of a security over a specified period of time. It is a cumulative ... More (OBV):

• The OBV line is trending upward, which supports the uptrend in price. This indicates that volume is higher on up days than on down days, reinforcing the bullish sentiment.

Stochastic RSIIn the realm of technical analysis, the Stochastic RSI (StochRSI) emerges as a powerful tool for traders seeking to navigate market dynamics with precision. Developed by Tushar S. ... More:

• The Stochastic RSI is at 0.476, which is in the neutral range. This indicates that the stock is neither overbought nor oversold at the moment, aligning with a continuation of the current trend.

Average Directional IndexThe Average Directional Index (ADX) stands as a cornerstone indicator in the toolkit of technical traders, offering insights into the strength of market trends. Developed by Welles... More (ADX):

• The ADX is currently at 42.24, indicating a very strong trend. Values above 25 typically suggest a strong trend, so the current reading supports the strong upward movement in the stock’s price.

Chaikin OscillatorNamed after its creator Marc Chaikin, the Chaikin Oscillator stands as a formidable tool in the arsenal of technical analysts. This oscillator is designed to measure the accumulati... More:

• The Chaikin Oscillator, at 13,284,866, suggests that there is buying pressure, as it measures the momentum of the Accumulation Distribution Line using the moving average.

The technical indicators suggest that Coupang Inc. is currently in a strong bullish trend, supported by high volume and buying pressure. However, the high RSI signals potential overbought conditions that might lead to a short-term pullback or consolidation. Investors should watch for changes in volume and RSI for signs of a reversal or continuation of the trend. Always remember that past performance is not an indication of future results, and it’s essential to conduct your own research before making investment decisions.

Book Recommendations

1. “Delivering Happiness” by Tony Hsieh – Insights into building a customer-centric company.
2. “Lean Logistics: The Nuts and Bolts of Delivering Materials and Goods” by Michel Baudin – A guide to optimizing logistics and operations.
3. “The Everything Store: Jeff Bezos and the Age of Amazon” by Brad Stone – Understanding aggressive market expansion and customer service excellence.