Technology, crypto currency and supplies of artificial intelligence (AI) have crossed in February. Coupang(NYSE: CPNG)On the other hand, this trend broke out largely. In addition to reporting an impressive growth for the fourth quarter 2024. After the markets closed on Tuesday, the company has spread to financial technology, new markets such as Taiwan, and food delivery leads to a strong growth for platform.
The good news is that there was a lot of growth for a job that just surpassed $ 30 billion in annual revenue. However, on Thursday, the market has fallen by 2.6%in two days of publication of earnings. Most likely, the market is an underlying stock of Coupang. Here’s why.
Investing deeper into the earning report, Coupang has published strong results throughout the board. In the fourth quarter, the revenue increased by 21% compared to the year at $ 8 billion, both on the neutral basis of organic and foreign currency. Coupang operates mainly in South Korea, but the seat is now -reported in US dollars, and can see the main tail winds or winds to grow, depending on the movements of foreign currency. Recently, she also bought a luxury platform of Farfetch, launching a former incentive of revenue growth.
The gross gain growth looks even more impressive, more than 48% compared to the year and still increases 29% if you turn off Farfetch and payment of insurance for warehouse fire. Adapted gross margin, a measure that focuses on basic profitability by removing unauthorized or unnoticed items, arrived at 29%, which is more than 25% a year ago. This is a sign of a job that not only grows but is growing profitable.
Although large investments in the development of new offers noted that the net income of Coupang was at $ 131 million, a year-round free cash flow was in the amount of $ 1 billion, which means that the company can self-finance growth with its own balance. This is a solid sign of a healthy job.
Talking about the development of the offer, the growth of this department-includes international e-commerce, financial technology and food delivery-has been revenue of 300% compared to the year (136% in the year if you turn off the revenue from Farfetch). This division already makes up $ 1.1 billion in a quarterly revenue and is growing fast, becoming a larger part of Coupang with time.
The segment of the development of developing looks promising, but let’s not forget the fundamental e-commerce market in South Korea, which still looks quite healthy. According to the company’s earnings, customers who joined Coupang still increase their market consumption more than six years ago, and new customers who joined this year starting with higher consumption levels.
This is a fantastic news for Cupang shareholders indicates that there are more growth for existing customers Coupang. On a neutral basis, consumption per active customer increased by 6% compared to the year during this period. If these new groups act like older cohorts, they will remain many years from the growth of consumption at an active customer.
Oh, and Coupang still adds new active customers every year. Total active customers increased by 10% in the year at 22.8 million in Q4 2024.
In the long run, Coupang believes it can reach a customized 10%profit margin. Although custom numbers are not always indicated by true profitability, I think Coupang can be trusted, given their effective operations and high Free cash flow Generation while still reinvests for growth.
In addition, since it collects money from customers before paying its e-commerce suppliers, it has a great cycle of craft capital that helps to increase free cash flow.
All of this is said, I think the margin of a free Coupang cash flow can be reached 10% or more because the job is still maturing. With $ 30 billion annual revenue despite the main winds of foreign currency, Coupang can easily surpass $ 50 billion in revenue in the next few years, because of all the growth factors mentioned above. At a 10%margin, it’s over $ 5 billion in the annual free cash flow.
Since market capang capang is just under $ 43 billion, or just 9x projected with free cash flow, the stock seems underestimated. This is for a job that increases gross profit close to 30% compared to the year, with the development of a segment of an offer that grows more than 100% per year. Yes, I still believe that the market is underestimating cupang stocks after pop -up. This is a technological giant in making and buying for investors today.
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