Should you buy or sell Coupang shares after missing analyst estimates?

on Nov 13, 2021
  • Coupang shares on Friday plunged more than 7% after announcing its most recent quarterly results.
  • The company reported its FQ3 revenue and earnings Thursday after markets closed, missing estimates.
  • Coupang said active customers grew by at least 20% for the 15th straight quarter.

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On Friday, Coupang Inc. (NYSE:CPNG) shares declined by more than 7% after reporting its fiscal third-quarter results. The company announced its most recent quarterly results Thursday after markets closed, missing the consensus for analyst expectations of revenue and earnings. However, Coupang also reported a Y/Y active customer growth of at least 20% for the 15th consecutive quarter.

The company posted FQ3 GAAP earnings per share of -$0.19, slightly missing the average for analyst estimates of -$0.18. On the other hand, revenue for the quarter skyrocketed by 47.8% for the same quarter in 2020 to $4.64 billion, falling short of analyst expectations by $200 million.

Coupang said gross profit increased by 62% from the same quarter last year to $755 million, boosted by a gross margin expansion of 130 basis points.

Is it safe to buy Coupang shares?

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From an investment perspective, Coupang shares trade at a reasonable price-sales ratio of 3.30, making the stock a compelling option for value investors. In addition, analysts expect its bottom line to improve by 23.60% this year.

Therefore, growth investors could also find the South Korean-based e-commerce company as an exciting option for their portfolios.

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Technically, Coupang shares appear to have recently plummeted to complete a downward breakout from an ascending channel formation. As a result, the stock has fallen closer to the oversold conditions of the 14-day RSI, creating an opportunity for a rebound.

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Therefore, with shares down more than 45% this year, investors could target potential rebounds at about $28.39, or higher at $30.29, while $25.92 and $23.83, are crucial support levels.

Should you buy the rebound?

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In summary, although Coupang reported disappointing Q3 results, earnings missed estimates marginally whilst maintaining customer growth and gross profit expansion.

Therefore, with shares falling closer to oversold conditions, it could be an opportunity to buy.


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