Coupang (CPNG)

Online platform company Coupang (NYSE:CPNG) missed Wall Street’s revenue expectations in Q4 CY2025, but sales rose 10.9% year on year to $8.84 billion. Its GAAP loss of $0.01 per share was significantly below analysts’ consensus estimates.

Company Overview

Founded in 2010 by Harvard Business School student Bom Kim, Coupang (NYSE:CPNG) is an e-commerce giant often referred to as the "Amazon of South Korea".

Consumers ever rising demand for convenience, selection, and speed are secular engines underpinning ecommerce adoption. For years prior to Covid, ecommerce penetration as a percentage of overall retail would grow 1-2% annually, but in 2020 adoption accelerated by 5%, reaching 25%, as increased emphasis on convenience drove consumers to structurally buy more online. The surge in buying caused many online retailers to rapidly grow their logistics infrastructures, preparing them for further growth in the years ahead as consumer shopping habits continue to shift online.

Coupang's Korea-based competitors include Naver (KRX:035420), Lotte Shopping (KRX:023530), and Kakao (KRX:035720). Amazon (NASDAQ:AMZN), Pinduoduo’s Temu (NASDAQ:PDD), and Alibaba’s AliExpress (NYSE:BABA) are also big international players in the market.

Examining a company’s long-term performance can provide clues about its quality. Any business can experience short-term success, but top-performing ones enjoy sustained growth for years. Luckily, Coupang’s sales grew at an impressive 18.8% compounded annual growth rate over the last three years. Its growth beat the average consumer internet company and shows its offerings resonate with customers.

This quarter, Coupang’s revenue grew by 10.9% year on year to $8.84 billion but fell short of Wall Street’s estimates.

Looking ahead, sell-side analysts expect revenue to grow 14.4% over the next 12 months, a deceleration versus the last three years. We still think its growth trajectory is attractive given its scale and suggests the market is forecasting success for its products and services.

Buyer Growth

As an online retailer, Coupang generates revenue growth by expanding its number of users and the average order size in dollars.

Over the last two years, Coupang’s active customers, a key performance metric for the company, increased by 9% annually to 24.6 million in the latest quarter. This growth rate is solid for a consumer internet business and indicates people are excited about its offerings.

In Q4, Coupang added 1.8 million active customers, leading to 7.9% year-on-year growth. The quarterly print was lower than its two-year result, suggesting its new initiatives aren’t accelerating buyer growth just yet.

Revenue Per Buyer

Average revenue per buyer (ARPB) is a critical metric to track because it measures how much customers spend per order.

Coupang’s ARPB growth has been decent over the last two years, averaging 6%. Its ability to increase monetization while effectively growing its active customers demonstrates the value of its platform.

This quarter, Coupang’s ARPB clocked in at $359.15. It grew by 2.8% year on year, slower than its buyer growth.

For online retail (separate from online marketplaces) businesses like Coupang, gross profit tells us how much money the company gets to keep after covering the base cost of its products and services, which typically include the cost of acquiring the products sold, shipping and fulfillment, customer service, and digital infrastructure.

Coupang’s unit economics are far below other consumer internet companies because it must carry inventories as an online retailer. This means it has relatively higher capital intensity than a pure software business like Meta or Airbnb and signals it operates in a competitive market. As you can see below, it averaged a 29.3% gross margin over the last two years. That means Coupang paid its providers a lot of money ($70.72 for every $100 in revenue) to run its business.

Coupang’s gross profit margin came in at 28.8% this quarter, down 2.5 percentage points year on year. Zooming out, the company’s full-year margin has remained steady over the past 12 months, suggesting its input costs have been stable and it isn’t under pressure to lower prices.

Investors frequently analyze operating income to understand a business’s core profitability. Similar to operating income, EBITDA is a common profitability metric for consumer internet companies because it removes various one-time or non-cash expenses, offering a more normalized view of profit potential.

Coupang has managed its cost base well over the last two years. It demonstrated solid profitability for a consumer internet business, producing an average EBITDA margin of 4.4%. This result was particularly impressive because of its low gross margin, which is mostly a factor of what it sells and takes huge shifts to move meaningfully. Companies have more control over their operating margins, and it’s a show of well-managed operations if they’re high when gross margins are low.

Analyzing the trend in its profitability, Coupang’s EBITDA margin rose by 2.5 percentage points over the last few years, as its sales growth gave it operating leverage.

In Q4, Coupang generated an EBITDA margin profit margin of 3%, down 2.3 percentage points year on year. Since Coupang’s gross margin decreased more than its EBITDA margin, we can assume its recent inefficiencies were driven more by weaker leverage on its cost of sales rather than increased marketing, R&D, and administrative overhead expenses.

Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions.

Coupang’s full-year EPS flipped from negative to positive over the last three years. This is a good sign and shows it’s at an inflection point.

In Q4, Coupang reported EPS of negative $0.01, down from $0.08 in the same quarter last year. This print missed analysts’ estimates, but we care more about long-term EPS growth than short-term movements. Over the next 12 months, Wall Street expects Coupang’s full-year EPS of $0.12 to grow 337%.

Free cash flow isn't a prominently featured metric in company financials and earnings releases, but we think it's telling because it accounts for all operating and capital expenses, making it tough to manipulate. Cash is king.

Coupang has shown mediocre cash profitability over the last two years, giving the company limited opportunities to return capital to shareholders. Its free cash flow margin averaged 2.4%, subpar for a consumer internet business.

Taking a step back, an encouraging sign is that Coupang’s margin expanded by 2.7 percentage points over the last few years. We have no doubt shareholders would like to continue seeing its cash conversion rise as it gives the company more optionality.

Coupang burned through $278 million of cash in Q4, equivalent to a negative 3.1% margin. The company’s cash flow turned negative after being positive in the same quarter last year, but we wouldn’t read too much into it because capital expenditures can be seasonal and companies often stockpile inventory in anticipation of higher demand, leading to quarter-to-quarter swings. Long-term trends are more important.

Companies with more cash than debt have lower bankruptcy risk.

Coupang is a profitable, well-capitalized company with $6.41 billion of cash and $3.68 billion of debt on its balance sheet. This $2.74 billion net cash position is 8.2% of its market cap and gives it the freedom to borrow money, return capital to shareholders, or invest in growth initiatives. Leverage is not an issue here.

We struggled to find many positives in these results. Its revenue missed and its EBITDA fell short of Wall Street’s estimates. Overall, this was a softer quarter. The stock traded down 2.7% to $18.18 immediately after reporting.

Updated: February 26, 2026 at 4:30 PM EST

Before deciding whether to buy Coupang or pass, we urge investors to consider business quality, valuation, and the latest quarterly results.

There are some bright spots in Coupang’s fundamentals, but its business quality ultimately falls short. First off, its revenue growth was impressive over the last three years. And while its gross margins make it extremely difficult to reach positive operating profits compared to other consumer internet businesses, its EPS growth over the last three years has been fantastic. On top of that, its projected EPS for the next year implies the company’s fundamentals will improve.

Coupang’s EV/EBITDA ratio based on the next 12 months is 13.9x. This valuation multiple is fair, but we don’t have much faith in the company. We're fairly confident there are better investments elsewhere.

Wall Street analysts have a consensus one-year price target of $29.51 on the company (compared to the current share price of $18.18).