Coupang is the IBD Stock Of The Day, as shares of the South Korean e-commerce leader are nearing a buy point after the company's second-quarter earnings report earlier this month.
U.S.-listed Coupang stock rose 5.1% to close at 23.59 on the stock market today. Year to date, its shares have gained 45.7%.
Coupang stock is now approaching a 23.77 buy point out of a 15-week consolidation pattern, according to IBD MarketSurge charts.
Founded in 2010, Coupang is South Korea's largest e-commerce company. With initial backing from Japan-based investment firm SoftBank, Coupang has invested heavily in developing same-day delivery in the country. Its offerings also include payments technology, food delivery and a streaming entertainment service.
'Solid' Q2 Results For Coupang
Coupang went public in an initial public offering on the New York Stock Exchange in 2021. The e-commerce firm posted its first annual profit last year, earning 75 cents a share vs. a loss of 5 cents a share in 2022.
Coupang reported second-quarter results on Aug. 6. Sales grew 25% year over year to $7.3 billion, roughly in-line with consensus estimates. However, the company posted a loss of 4 cents per share for the quarter, wider than the 2-cent loss forecast by analysts, according to FactSet.
Coupang attributed its loss partly to the inclusion of Farfetch to its business. Coupang completed a $500 million deal in January to acquire the U.K.-based global luxury goods marketplace.
"CPNG reported a good quarter with solid topline growth and convincing EBITDA beat," Mizuho analyst James Lee wrote in a client note following the report. EBITDA refers to earnings before interest, taxes, depreciation and amortization. Lee said revenue and EBITDA beat expectations when excluding Farfetch.
Lee is neutral on Coupang stock, however, citing what he called a valuation premium.
Following the Q2 report, Coupang stock gained 2.6% during the next regular trading session on Aug. 7.
Coupang Stock Had Earlier Breakout
In April, Coupang broke out of a cup-with-handle base at a buy point of 19.78. The stock gapped up 11.5% on April 12 on news that Coupang increased the price of its Amazon Prime-like Wow membership.
Analysts with Morgan Stanley rate Coupang stock with a bullish outperform. In a global-e-commerce-themed client note on July 18, a team of Morgan Stanley analysts said Coupang's more than 14 millions Wow members are helping power its growth.
Last year "saw Coupang's revenues grow close to 25% when including (Fulfillment and Logistics by Coupang) on a gross basis, far outpacing market growth (domestic online shopping) of 8%," the Morgan Stanley note said.
There are 18 analysts following Coupang stock, according to FactSet. Of those analysts, 13 give Coupang a buy or equivalent rating, while four have a hold rating and one considers Coupang a sell.
Competition From Alibaba, PDD
Despite strong returns this year, Coupang stock is still well behind the highs it reached immediately after its IPO in late 2021. 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.
And there are challenges ahead, as competition is growing. China-based PDD Holdings, parent company of Temu, and Alibaba are each looking to grow in South Korea, a country of more than 50 million people.
But Coupang itself is expanding. Coupang began ramping up investments in Taiwan last year.
Coupang Stock Ratings
Meanwhile, Coupang stock holds an IBD Composite Rating of 66 out of 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 is 87 out of 99, indicating it is outperforming 87% of stocks tracked by IBD over the past 52 weeks.
But with back-to-back quarters of earnings-per-share declines, Coupang has a weak EPS Rating of 21 out of 99.
Further, Coupang stock holds an Accumulation/Distribution Rating of B-. That rating analyzes price and volume changes in institutional ownership for a stock over the past 13 weeks. The current rating indicates slightly more buying than selling by institutions.
Other international-focused e-commerce stocks were higher Monday as well, including Southeast Asia-focused Sea Ltd., PDD Holdings and Latin America e-commerce firm MercadoLibre.
