Coupang’s Stock Soars: Is It Time to Invest for 2025?

Shares of Coupang (NYSE: CPNG) have quietly climbed by 77% in the past year amid strong growth from the South Korean e-commerce leader. This rally is a welcomed turn of events for longtime investors after a tough post-pandemic period that saw disappointing company results. However, the stock is still 51% below its 2021 IPO price of $63.50, indicating a significant shift in expectations during that time.

Could the latest trends signal the beginning of a larger turnaround? Let’s explore the potential of Coupang stock in 2025.

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Is It Time to Buy or Hold Coupang Stock?

Coupang is one of Asia’s largest retailers, offering a wide range of products from groceries to electronics and fashion through its online marketplace. Its Coupang Wow subscription has won over customers with same-day delivery, exclusive deals including streaming movies, and gym access in select areas.

Focused primarily on South Korea, Coupang’s dominance has kept Amazon from making substantial inroads, showcasing Coupang’s unique advantage in understanding local customer preferences.

In recent years, the company has extended its reach in Asia, opening logistics hubs in Singapore and Taiwan, which have become significant growth areas. In 2024, Coupang purchased the specialty online luxury fashion marketplace Farfetch, aiming to broaden its offerings beyond mass-market retail. While Farfetch is not yet profitable, it is contributing to Coupang’s revenue growth.

Image source: Getty Images.

For the third quarter, which ended on September 30, 2024, Coupang’s net revenue grew impressively by 27% year over year, or 20% when excluding the impact of Farfetch. This growth was accompanied by an 11% increase in active customers to 22.5 million, who are spending more per transaction.

The real story lies in the rapid growth of Coupang’s new services, including Coupang Eats (food delivery) and Coupang Pay (financial technology payments). This segment saw Q3 revenue growth of a remarkable 146% year over year, even without the boost from Farfetch.

Management is optimistic, with Wall Street analysts predicting a 24.7% revenue growth for 2024, followed by 15.5% in 2025. The adjusted earnings per share (EPS) forecast is particularly encouraging, expected to rise to $0.49 in 2025 from just $0.01 in 2024.

For investors believing the company is just starting to secure its market share and expand globally, now may be the time to buy the stock.

Data source: Yahoo Finance. YOY = year over year.

Reasons to Consider Selling Coupang Stock

While there are strong growth trends in e-commerce and fintech, it’s essential to critically analyze investments and recognize potential pitfalls.

Coupang has a mixed performance history in a highly competitive environment, which raises concerns. Other retailers across Asia-Pacific are also vying for the same growth, adding uncertainty.

Currently, Coupang’s stock is trading at 48 times its consensus 2025 EPS, indicating a high price-to-earnings (P/E) ratio. This valuation appears steep when compared to regional competitors like Sea Limited (with a forward P/E of 34) and Chinese giants Alibaba and PDD Holdings, trading closer to a P/E of 10.

Even against Amazon, which has a forward P/E of 38, Coupang looks expensive. Although high valuations aren’t necessarily a dealbreaker if growth continues, they suggest significant risk if the company’s performance begins to slide.

Investors skeptical of Coupang’s ability to achieve consistent profitability may want to reconsider holding or purchasing the stock in 2025.

CPNG PE Ratio (Forward) data by YCharts

Final Thoughts: A Cautiously Optimistic Outlook

The year 2025 will be crucial for Coupang to verify its long-term prospects. I maintain a cautiously optimistic view and deem the stock a potential buy, with reasonable chances of a higher share price by this time next year. For those who can handle some volatility, it may have a place in a diversified portfolio.

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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Dan Victor has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon. The Motley Fool recommends Coupang. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.