• Coupang stock is down 39% year to date ahead of Q3 results.
  • Coupang is expected to post a net loss per share for Q3.
  • The focus will be on Coupang’s dominant position and logistics business.

Coupang Inc. (NYSE: CPNG) is scheduled to report its Q3 2021 results on November 11, 2021, after the market closes. It heads into the earning session as one of the fastest-growing e-commerce heavyweights with operations in South Korea.

Chart showing Coupang steep pull back

However, the company’s sentiments have taken a significant hit ever since it went public in March. The stock is down by about 39%, underperforming the S&P 500, which is up by more than 20% year to date. The underperformance stems from growing concerns about working conditions at the company and the fire that engulfed the company’s logistics center warehouse in June.

When Coupang reports, at focus will be its dominant position in the South Korean e-commerce market and whether it is under threat. Strength in the country’s e-commerce sector is likely to have fuelled the performance with the market waiting to see whether revenue and earnings numbers will affirm continued growth to top estimates.

Q3 earnings expectations

Coupang is poised to deliver Q3 results at the bank of an impressive track record. Over the last 15 quarters, the company has posted more than 50% in year-over-year revenue growth. Its revenue run rate currently stands at over $18 billion annually.

Coupang revenue is expected to grow remarkably over the next five years, owing to the growing online sales in South Korea. Revenue is estimated to grow at a CAGR of 23.2% through 2026, much faster than the South Korean e-commerce market CAGR of 19.1%.

In the second quarter, the e-commerce company posted a 71% year-over-year increase in revenue that landed at $4.48 billion. Gross profit increased 50% year-over-year to $658.94 million. However, the company’s net loss widened to $518,601 from $102,050. Adjusted EBITDA, on the other hand, ended at a loss of $122,147, a 114% increase from a loss of $57,030 delivered the same quarter last year.

Wall Street expects the company to deliver an adjusted net loss per share of $0.16 for its third quarter. Coupang is expected to deliver a gross merchandise value of over $30 billion for this year.

What to look out for when Coupang reports

In the aftermath of the pandemic, more people flocked to the e-commerce platform in pursuit of online orders for groceries, medicines, and other essential items. With the easing of the COVID-19 pandemic fears and restrictions, it should become clear if the growth in online orders persisted in the quarter.

The market will also pay close attention to Coupang’s logistics business which has been on a roll over the past year owing to growing internet usage and demand for ultrafast delivery services.

Total active customers visiting the e-commerce platform will also elicit strong interest given its impact in driving revenue run rate. In the second quarter, active customers increased by 26% year over year to 17 million, waiting to see if the momentum continued.

Additionally, revenue per active customer grew by 36% year-over-year. Further growth on this front should allow Coupang to deliver solid numbers on revenue following 71% growth in the second quarter year-over-year.

Bottom line

Coupang stock has taken a significant hit since going public in March. With the stock down by more than 30%, a new string of catalysts is needed if the stock is to bounce back and re-rate higher. The Q3 report could be the catalyst to strengthen investors’ sentiments and fuel a bounce back after the steep pullback. A disappointing report could spook the market, which could result in the stock edging lower.