Shares of Coupang Inc. surged after the South Korean e-commerce giant exceeded quarterly profit expectations, boosted by a one-time insurance gain, despite facing stiff competition from Chinese rivals. The company reported operating income of $312 million, nearly double analysts’ expectations of $168 million, following an insurance payout related to a 2021 fire at one of its fulfillment centers. In the December quarter, net revenue rose 21%, slightly missing analysts’ forecasts, while active customers in the product commerce segment increased by 10%.
Coupang’s stock rose as much as 6.1% in after-hours trading in New York, and the company’s shares have gained 10% so far this year.
Founded in 2010 and backed by SoftBank Group Corp., Coupang has heavily invested in South Korea’s e-commerce market, particularly in popularizing overnight delivery. The company has also expanded into food delivery and streaming services, and recently acquired the London-based luxury online retailer Farfetch in January of last year. Revenue from Coupang’s “developing offerings” segment, which includes these new business ventures, surged by almost 300%, or 124% excluding Farfetch.
As competition heats up from Chinese e-commerce giants like Alibaba Group’s AliExpress and PDD Holdings’ Temu, Coupang is diversifying its business model to stay ahead. Alibaba has already partnered with South Korean retailer E-Mart Inc. to bolster its presence in the country’s fast-evolving retail market.
“We view our developing offerings as a series of strategic investments,” said Coupang CEO Bom Kim during the post-earnings call. “These initiatives are gaining significant traction and are already integral to our long-term growth strategy.”
Despite the strong performance, Coupang reported a sharp 85% drop in quarterly net income, mainly due to a one-time tax accounting gain in the previous year. However, the company posted a second consecutive annual net income, with a 24% increase in full-year revenue.
Coupang’s efforts to expand into new sectors and adapt to an increasingly competitive market reflect its ongoing strategy to bolster its market position in South Korea, where high household debt remains a key economic challenge.
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