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Investing.com -- Coupang Inc. shares jumped more than 5% Monday after the stock was double-upgraded to Outperform by Bernstein, who raised the price target to $30 from $18 per share.
In their note, Bernstein analysts highlighted Coupang's strong performance in 2024, driven by two key factors: a successful subscription fee increase and an industry-wide liquidity crisis.
"Today, we upgrade CPNG to Outperform, highlighting that we expect a market shift from fierce competition to duopoly," said Bernstein.
"Since our initiation in 2022, Coupang has been one of our key trading short ideas. However, in 2024, CPNG has exceeded our expectations," Bernstein noted.
The company's ability to raise its membership fee without impacting user loyalty was a pivotal factor in its upgrade.
Coupang's "Wow" membership fee rose by $3 in August, and the company's customer base showed strong resilience. Bernstein believes a further price increase could be on the table by 2026, with the market likely to start pricing it in by 1H25.
The analysts also pointed to an industry-wide consolidation triggered by Qoo10's liquidity crisis, which left Coupang and Naver as the dominant players in the market.
They state that Coupang's 2024 year-to-date market share stands at 26%, with Naver close behind at 24%. This is said to have led to strong year-on-year growth in gross merchandise value (GMV) for both companies, and Bernstein expects further consolidation of smaller competitors, which will benefit Coupang in the long term.
Bernstein also sees Coupang's improved relationships with key vendors, such as CJ, as another catalyst for growth, calling Coupang one of the few global e-commerce companies still achieving over 20% growth.
With fierce competition easing, Bernstein expects Coupang to achieve a 4% operating margin on GMV in the long term. The firm sees Coupang's short-term earnings as potentially volatile but believes the current macroeconomic environment presents a "good entry point" for investors.