Both Coupang Inc. (CPNG) and Amazon.com, Inc. (AMZN) are leading players in the growing e-commerce industry. The largest online retailer, AMZN, is not only dominating the sector with the help of its Prime services but is also dominating the cloud space with Amazon web services (AWS). CPNG is a South Korea-based e-commerce company that also earns from advertising on its websites and mobile applications.
E-commerce companies were growing before the COVID-19 pandemic, but most of them received a major boost amid the pandemic as people were forced to stay at home and rely on their platforms for work and other connections and communications. Because this trend is expected to continue over the long-term based on its convenience, both CPNG and AMZN are expected to witness increasing demand for their products and services. Furthermore, the recent resurgence of the COVID-19 cases could further boost the performance of e-commerce players in the near- to mid-term.
CPNG has lost 11.1% since it started trading publicly on March 11, 2021, but AMZN has returned 1.6% over the same period. But which of these two stocks is a better pick now? Let’s find out.
CPNG made its market debut on the New York Stock Exchange through an IPO on March 11, 2021 and started trading at $63.50. On March 16, 2021, the company was named to Fast Company’s prestigious annual list of the World’s Most Innovative Companies (MIC) for 2020.
CPNG announced a partial early lock-up release of approximately 34 million shares held by its executives and employees. Their shares became eligible for trading from March 18.According to a March 15 filing with the U.S. Securities and Exchange Commission (SEC),the company’s CEO Bom Kim sold 1.2 million Class A stocks of the company at $35 apiece, which totaled $42 million.
AMZN is facing greater regulatory scrutiny l under the Biden administration. However, it has nonetheless made several positive moves. In March, the company’s Prime Video unit became the first streaming service to secure an exclusive national broadcast package from the National Football League (NFL). AMZN also announced its plans to open a new fulfillment center in Amarillo, Tex., which is expected to be operational in early 2022.
Also last month, Amazon Music integrated artist merchandise within its mobile app. It also launched an exclusive merchandise collection from an exciting array of artists, including a new line of apparel developed by Selena Gomez. It also features new merchandise from Gwen Stefani, Metallica, Queen Naija and Pentatonix, among others.
Recent Financial Results
CPNG’s net retail sales increased 90.9% year-over-year to $11.05 billion for the fiscal 2020 ended December 31, 2020. Its net other revenue also increased 89.7% year-over-year to $922.24 million for the same period. However, the company’s operating loss was $527.73 million, and its net loss came in at $474.90 million.
AMZN’s net product sales for the fourth quarter ended December 31, 2020 increased 40.6% year-over-year to $71.06 billion. The company’s net service sales increased 47.7% year-over-year to $54.50 billion. Furthermore, its net income came in at $7.22 billion, up nearly 121% year-over-year, and its EPS increased 117.8% year-over-year to $14.09.
Expected Financial Performance
Analysts expect CPNG’s revenue to be $16.46 billion for the fiscal year ending December 31, 2021, which represents a 37.5% year-over-year rise. In comparison, AMZN’s revenue is expected to increase 22.5% year-over-year to $472.84 billion over the same period.
AMZN’s trailing-12-month revenue is much higher than CPNG’s $11.97 billion. AMZN is also more profitable, with a gross profit margin of 39.6% versus CPNG’s 16.6%.
Also, AMZN’s levered free cash flow margin of 9.5% compares favorably with CPNG’s 1.3%.
In terms of trailing 12-month price/sales, AMZN is currently trading at 4.09x, more expensive than CPNG, which is currently trading at 0.31x. However, CPNG is more expensive in terms of trailing-12-month enterprise value/sales (7.15x versus 4.17x).
In terms of trailing-12-month price/cash flow, CPNG’s 269.08x is significantly higher than AMZN’s 24.09x.
CPNG has an overall C rating, which equates to a Neutral in our proprietary POWR Ratings system. However, AMZN has an overall rating of B, which represents a Buy. The POWR Ratings are calculated by considering 118 different factors with the weighting of each optimized to improve overall performance.
AMZN’s B grade for Quality is in keeping with its trailing-12-month gross profit margin of 39.6%, which is higher than the industry average 33.2%. However, CPNG’s trailing-12-month gross profit margin of 16.6% is lower than the industry average 33.2%. So, it’s no surprise that it has a C grade for Quality.
AMZN also has a B grade for Growth and Sentiment, which is consistent with analysts’ expectation that its EPS will increase significantly in the coming months. However, CPNG’s near-term outlook seems to be uncertain. So, it has a C grade for both Growth and Sentiment.
Of 70 stocks in the Internet industry, CPNG is ranked #40 while AMZN is ranked #8.
Beyond what we’ve stated above, our POWR Ratings system has also rated both CPNG and AMZN for Value, Momentum, and Stability. Get all CPNG’s ratings here. Also, click here to see the additional POWR Ratings for AMZN.
AMZN is an established company in the e-commerce space while CPNG was founded only in 2010. Also, CPNG reported loss in fiscal 2020. So, we think it’s wise to bet on AMZN whose market dominance in the e-commerce space is unparalleled.
Click here to learn about seven other top-rated stocks in the Internet industry.
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AMZN shares were trading at $3,226.10 per share on Tuesday afternoon, down $0.63 (-0.02%). Year-to-date, AMZN has declined -0.95%, versus a 9.07% rise in the benchmark S&P 500 index during the same period.
About the Author: Manisha Chatterjee
Since she was young, Manisha has had a strong interest in the stock market. She majored in Economics in college and has a passion for writing, which has led to her career as a research analyst. More...
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