This stock is beating amazon at its own game

The "Amazon of South Korea" might be better than the Amazon of the rest of the world.

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This article was originally published on All figures quoted in US dollars unless otherwise stated.

If you want to find the next great online retailer, you may want to pack a passport. Coupang Inc. (NYSE: CPNG) shares have started to spring back to life, and the South Korean e-tailer is growing faster and doing a few things better than the mighty (NASDAQ: AMZN). We saw that on public display last week with Coupang reporting healthy financial results and raising its guidance. 

Coupang stock has generally been sliding since peaking at $69 on its first day of trading in the springtime of last year, and it isn't close to setting a new high-water mark anytime soon. However, with the online retailer now more than doubling after bottoming out in the single digits three months ago -- up 110% through Friday's close -- it's a good time to take a fresh look at a promising player trading below last year's $35 IPO price tag. 

Time is on its side

Net revenue rose 12% to hit $5.04 billion for the three months ending in June. This is roughly in line with expectations, but keep in mind that this is reported revenue for U.S. investors in a climate where the dollar has been rising. Coupang's top line actually rose 27% on a constant currency basis. The news gets better, as margins improved to the point where it posted a much smaller loss than analysts were targeting. After several periods of bloated deficits, Coupang has now rattled off back-to-back quarters of dramatically less red ink than what Wall Street was expecting.

Coupang also surprised the market by posting its first quarter of positive adjusted EBITDA. The welcome milestone finds the e-tailer now eyeing positive adjusted EBITDA for all of 2022. It was modeling a $400 million deficit on that front earlier this year.  

Coupang hit the market with a model that should make the Amazon boardroom envious. With 100 fulfillment centers across South Korea, it's within 7 miles of 70% of the country's population. This gives it a robust moat. Its fleet of drivers get going early. If you place a grocery or merchandise order before midnight, it should be at your door by 7 a.m. the next morning. If you have something you need to return, just leave it outside and let Coupang know. A driver will pick it up the next day. 

It's not just convenience that finds Coupang raising the bar with what even Amazon can't match in terms of service closer to home. Coupang is also growing a lot faster than Amazon. 

FY 201921%51%
FY 202028%91%
Q1 202144%74%
Q2 202127%71%
Q3 202115%48%
Q4 20219%34%
Q1 20227%22%
Q2 20227%12%

Data sources: Amazon and Coupang.

Coupang has routinely been growing revenue two to three times faster than Amazon, and that also holds true for each company's latest report if you go with the 27% year-over-year revenue increase for Coupang on a constant currency basis. This makes sense. Coupang is much earlier in its growth cycle, even though it's well entrenched with its market share stronghold in South Korea. 

Growth has certainly slowed at Coupang. This is the sixth consecutive quarter of sharply decelerating growth on a reported basis. This is also the case for the top-line gains on a constant currency basis, as it was a 32% gain for Coupang in South Korea for the first quarter.

The stock has already more than doubled off its springtime low, but it's still fetching a little more than half of its IPO price. With Coupang continuing to dominate its market -- and now improving on the bottom line -- it's one of the more interesting internet retail stocks today. Don't be afraid of getting your portfolio's passport stamped. There's a world of opportunity out there.

This article was originally published on All figures quoted in US dollars unless otherwise stated.

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Rick Munarriz has positions in Amazon. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Amazon and Coupang, Inc. The Motley Fool Australia has recommended Amazon. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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