Coupang stock slid in Wednesday trading, as investors digested a first-quarter report that missed the mark for earnings but included better-than-expected revenue.
South Korean e-commerce leader Coupang late Tuesday reported net income of $5 million, or 0 cents per share. Analysts were projecting earnings of 5 cents per share, according to FactSet.
Meanwhile, Coupang's revenue for the March-ended quarter increased 23% to $7.1 billion, topping consensus estimates of $6.9 billion.
On the stock market today, U.S.-listed Coupang stock dropped more than 8% to 21.57 in recent action.
More Competition, Farfetch Deal
Coupang attributed its lower-than-expected earnings to the inclusion of Farfetch to its business. Coupang completed a $500 million deal in January to acquire the global luxury goods marketplace.
Without Farfetch, Coupang said its net income for the quarter would have been $98 million, or 5 cents per share.
But the company also said it needs to continue investing in its operations to ward off challengers. China-based PDD Holdings, parent company of Temu, and Alibaba are each looking to grow in South Korea.
"New China commerce entrants remind us that barriers to entry are low and consumers can switch shopping options faster in retail than in almost any other industry, within seconds and with a swipe of the finger," Chief Executive Bom Kim told analysts Tuesday.
To maintain its market lead, Coupang plans to "continue investing billions of dollars in (capital expenditures) over the next several years to strengthen our fulfillment and logistics infrastructure," Kim said.
Following the report, Mizuho analyst James Lee reiterated a neutral rating for Coupang stock but raised his price target to 23, from 20.
"The top-line trend indicates that CPNG continues to gain market share, leveraging its advantage in fast shipping from larger infrastructure vs. peers," Lee wrote to clients Wednesday.
Coupang Stock: Strong Start To 2024
Despite Wednesday's slide, Coupang stock is off to a strong start in 2024. Shares are up 33% so far this year, compared with a 8.7% gain for the S&P 500.
Coupang broke out from a cup-with-handle base in April after announcing a price increase for its Amazon Prime-like Wow service. However, Wednesday's action pushed Coupang stock below its 21-day moving average.
Coming into the report, Coupang stock had a strong IBD Composite Rating of 91 out of 99, according to IBD Stock Checkup. The best-performing growth stocks typically have a Composite Rating above 90.
