Coupang Receives Double Upgrade from Bernstein

Shares of Coupang Inc. surged over 5% on Monday following a double-upgrade to Outperform by Bernstein, which also increased the price target from $18 to $30 per share.

In their analysis, Bernstein cited Coupang’s strong performance in 2024 as a result of two main factors: a successful increase in subscription fees and a liquidity crisis affecting the entire industry.

Bernstein stated, “Today, we upgrade CPNG to Outperform, anticipating a market transition from intense competition to a duopoly.”

Since initiating coverage in 2022, Coupang had been regarded as a primary short trading idea, but the company has surpassed expectations in 2024, according to Bernstein.

A key aspect of Coupang’s upgrade was its ability to raise membership fees without compromising customer loyalty. The “Wow” membership fee increased by $3 in August, yet the company’s customer base displayed remarkable resilience. Bernstein posits that there could be another price hike by 2026, with the market potentially beginning to reflect this by the first half of 2025.

The analysts also noted ongoing industry consolidation, particularly due to Qoo10’s liquidity problems, which have positioned Coupang and Naver as the market leaders. As of 2024, Coupang holds a 26% market share, closely followed by Naver at 24%. This has contributed to significant year-over-year growth in gross merchandise value (GMV) for both firms, and Bernstein anticipates further consolidation of smaller competitors, benefiting Coupang in the long run.

Additionally, Bernstein recognized Coupang’s strengthened relationships with key vendors, such as CJ, as another growth driver, highlighting that Coupang is among the few global e-commerce firms achieving over 20% growth.

With competition beginning to ease, Bernstein predicts that Coupang could reach a 4% operating margin on GMV in the long term. While short-term earnings may be volatile, the current macroeconomic landscape is viewed as a favorable entry point for investors.