COUPANG STOCK ANALYSIS - Undervalued Now? Intrinsic Value Estimate! | Summary and Q&A

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June 7, 2021
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The Intelligent Investor
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COUPANG STOCK ANALYSIS - Undervalued Now? Intrinsic Value Estimate!

TL;DR

Cole Pen Stock, known as the "Amazon of Korea," has seen a drop in market cap since its IPO, but still has significant growth potential domestically and internationally.

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Questions & Answers

Q: How does Cole Pen's business model compare to Amazon's?

Cole Pen's business model is similar to Amazon's, focusing on B2C e-commerce. However, Cole Pen owns most of its inventory and has higher inventory costs compared to C2C marketplaces like eBay.

Q: Is Cole Pen profitable?

Cole Pen is still in the early growth stage and not yet profitable. The company needs to reinvest capital into its business, resulting in losses. Consistent profits and positive cash flow are not expected in the near future.

Q: What are the risks associated with investing in Cole Pen?

The main risks include the company's lack of profitability and negative cash flows, potential limited growth in the domestic market, and increased competition from other e-commerce players in Korea.

Q: How can Cole Pen's fair interest value be estimated?

Due to the company's inconsistent cash flow growth, a discounted cash flow (DCF) model is not appropriate. Instead, comparable companies' price-to-sales multiples, such as Amazon, JD.com, and Rakuten, can be used to estimate Cole Pen's fair interest value per share.

Summary & Key Takeaways

  • Cole Pen is the largest online retail store in South Korea, offering a wide range of products and boasting a strong fulfillment and logistics network.

  • With a domestic market still in the early growth stage, Cole Pen is benefiting from increased online shopping due to the pandemic.

  • The company is expanding into fresh produce and food delivery services, further enhancing its growth potential.

  • Cole Pen's international expansion into markets like Japan is on the horizon, with the larger population and GDP of these countries offering significant opportunities.

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