South Korean e-commerce company Coupang is the IBD Stock of the Day. Coupang stock broke out from a cup-with-handle base Friday following news that the company would increase the price for its membership program.
On the stock market today, Coupang stock rose 11.5% to close at 21.25. With the gap-up, shares broke out above a 19.78 buy point from a cup-with-handle base, according to IBD MarketSurge. The gains continued a strong start to the year in which Coupang is up nearly 30%.
Founded in 2010, Coupang is South Korea's largest e-commerce company. The company's shares are listed on the New York Stock Exchange.
Coupang Stock: Rising On Higher Fees
The apparent catalyst for Coupang's jump on Friday is its plan to charge a higher monthly fee for its Wow membership. The company announced the change through a news release Friday in Korea. The fee will increase to 7,890 won ($5.70) per month from its previous 4,990 won ($3.61), according to the Korea Times.
The new pricing begins on April 13 for new members and in August for current ones. Similar to Prime membership from Amazon, Coupang members get free shipping, access to Coupang's streaming network and free food delivery, among other perks.
Coupang said in its news release that it will "continue to expand its exclusive benefits for Wow members such as free shipping, free returns, unlimited OTT (over-the-top) service and free food delivery," according to a translation from the Korea Times. The news report noted, however, that some users have voiced displeasure online with the change.
The company's Wow membership had more than 14 million paying members as of the end of 2023, according to the company's fourth-quarter earnings statement. Membership grew 27% last year.
Coupang Stock: Operating Profit In 2023
With initial backing from Japan-based investment company Softbank, Coupang has invested significant resources to enable same-day delivery in the country. Coupang went public through an initial public offering on the New York Stock Exchange in 2021.
Coupang stock surged following the company's fourth-quarter earnings report in late February. Revenue increased 23% to $6.6 billion, ahead of consensus.
For all of 2023, Coupang reported revenue of $24.4 billion, up 18% from a year earlier. Notably, the company reported operating income of $473 million, compared to a $112 million operating loss in 2022 and $1.5 billion operating loss in 2021.
In 2022, the company opened a global headquarters in Seattle, where Amazon is also based.
Growing Competition
Coupang is facing fierce competition. The price hike for Wow membership comes as China-based PDD Holdings and Alibaba are each looking to grow in South Korea, a Korea Times report noted.
Coupang itself is expanding. The firm said last summer that it would ramp up investments in Taiwan. On the other hand, Coupang last year ceased operations in Japan after two years.
The company recently paid $500 million to acquire U.K.-based luxury goods e-commerce platform Farfetch, which was once valued at more than $20 billion through a private investment round as a startup.
There are 16 analysts following Coupang stock, according to FactSet. Of those analysts, 10 give Coupang a buy or equivalent rating, while five have a hold rating and one considers Coupang a sell.
For 2024, analysts project that Coupang's sales will rise 18% to $28.75 billion. Adjusted earnings are expected to tick up to 28 cents per share for the year, from 26 cents per share last year, according to FactSet analyst consensus.
Coupang Stock: Technical Ratings
With Friday's action, Coupang is breaking out from a long chart base of 30 weeks, according to MarketSurge. The stock is also on track for its highest close since Oct. 6, 2022, when it closed at 21.03, according to Dow Jones Market Data.
Coupang shares still have a long way to climb to reach previous heights. Coupang's all-time high is a close of 50.45 on March 15, 2021. That was only days after the firm's successful IPO.
Meanwhile, Coupang stock holds an IBD Composite Rating of 88 from a best-possible 99, according to IBD Stock Checkup. The score combines five separate proprietary ratings into one. The best growth stocks typically have a Composite Rating of 90 or better.
Coupang stock's Relative Strength Rating score is a 74 out of a best-possible 99, indicating it is outperforming 74% of stocks tracked by IBD over the past 52 weeks.
Further, Coupang stock holds an Accumulation/Distribution Rating of A-. That rating analyzes price and volume changes in institutional ownership for a stock over the past 13 weeks. The current rating indicates more buying than selling by institutions.
Coupang is part of the IBD Retail-Internet group of stocks. The group is topped by Amazon, with Coupang ranked fifth, according to IBD Stock Checkup. The group overall has notched above-average performance of late, ranking 55th out of 197 industry groups, according to MarketSurge.
