r/valueinvesting
The Case for Coupang
Deep dive on Coupang as an undervalued elite e-commerce leader in South Korea with strong membership pricing power, offset by Taiwan drag and a data breach.
- Dominant SK e-commerce with best-in-class logistics (same-day / dawn delivery), akin to Amazon in the US
- Wow membership shows strong pricing power: 60% price hike with no meaningful cancellation surge
- Trading at roughly half of intrinsic value, offering a significant margin of safety
- Taiwan expansion is a material earnings drag as the company invests heavily to replicate the SK model
- Recent employee data breach (33M records leaked) triggered the sharp sell-off and reputational risk
- Farfetch was near bankruptcy at acquisition; turnaround to break-even is still fragile
I have seen a post or two about Coupang, but thought it was time for a deep dive of what I believe to be an elite company trading at half price. I could go into a lot more detail and am happy to in the comments, but will attempt to keep as simple as possible for easy digestion of the main thesis.
South Korean Business overview
Coupang is technically US based company, but the vast majority of their business is actually done in South Korea. The main cash cow is the SK e-commerce business which is essentially equivalent to Amazon’s US e-commerce business. One key differentiator though is the speed. If you order products between 9-10am they typically arrive same day. And if you order by midnight typically items will arrive by dawn.
Two other important elements are their streaming business (think Amazon Prime Video) and their grocery and food delivery business (think Uber Eats).
Wow membership
For about 6 USD a month you can purchase a Wow membership (similar to Amazon Prime) that gives you free e-commerce delivery, free grocery and food delivery, and the streaming service. Interestingly in 2024 they increased the cost of this membership by about 60% and did not see any surge in cancellation.
Developing offerings
Coupang’s Developed offerings segment important includes their expansion into Taiwan. They are investing heavily and seeing significant growth, essentially in attempt to recreate their South Korean business in Taiwan. It is currently a significant drag on earnings.
This segment also includes Farfetch which is a luxury goods company that was near bankruptcy when Coupang bought it. They have since cut costs to get the venture to above break even. Worth noting SK is a heavy consumer of luxury brands.
Technically this segment includes the streaming service and Eats, but I prefer to loop those in with the membership.
Reason for sudden price drop
There was a data breach in late 2025 by an employee which leaked information on 33 million customers. No payment info was leaked, but personal information and contact information was leaked. This was a massive story that US and Korean politician were posting on social media about, and my understanding is Vice President Vance discussed this issue directly with high ranking members of the SK government as it looked like they were targeting the company specifically due to it being based in the US.
Fast forward to now, Coupang lost money in their latest quarter, news on the data breach and vouchers to affected customers were issued, this combined with the fact Coupang was already speaking ahead of volume to continue to ramp production led to a very poor start to the year.
Thesis
While Coupang did experience a drop in earnings and stock price in the last 6 months, in a 5-10 year window, possibly even 2-3 I expect the data breach to become old news. Coupangs unmatched delivery speed, low prices, and the services bundled with the Wow membership provide too strong a value for this to be a long term issue. They also have a fortress balance sheet with a net cash position. They were just issued a significant fine, but they easily can pay it off without harming the business.
Valuation:
- Looking at coupangs history and some comparable companies I view a 2x p/s ratio as fair value. That gives them a share price of 38.52
- Long term I expect them to be able to achieve 10% operating margins. With 3% revenue growth somewhere in the 2029 or 2030 range I expect them to post an eps in the range of 1.8, at a 20% eps that gives them a value of 36 per share
I estimate the fair value to be in the neighborhood of 35-40 per share
As an added bonus famed value investor David Abram’s holds a significant stake in Coupang at about $29 per share, and insider Neil Mehta (who runs the absurdly successful Greenoaks capital partners) bought over $136 million worth of shares earlier this year at around $18.50
Management
Coupang is still lead by founder Bom Kim and as mentioned previously has a fortress balance sheet. They are clearly still growth focused but have also started buying back significant amount of shares.
TLDR:
Coupang is a founder lead business, delivering significant value for customers, and very difficult to disrupt, and is about half priced due to a temporary issue.