Amazon (AMZN -8.43%) has place up file inventory returns considering that going community in the late 1990s. Shares are up 99,000% on an all-time foundation even after a substantial drawdown in 2022, which is additional than 100x the returns you would have gotten by investing in the S&P 500 over that time time period.

The e-commerce pioneer has ridden the shopper transition from in-human being to on the web buying and has turn into one of the world’s most significant companies in the method. But Amazon is not the only e-commerce stock. 

If you want to acquire other e-commerce stocks to trip this worldwide retail changeover, appear no further more than Coupang (CPNG -7.80%), which lately experienced its first community featuring. This is why it is my beloved e-commerce stock to acquire right now. 

What is Coupang?

Coupang is a vertically built-in e-commerce organization centered in South Korea. Given that starting off a very little above a ten years ago, the company created up a big supply and logistics network across its house country that is unmatched by any neighborhood opponents.

With 42 million square ft of logistics space and 70% of the Korean populace inside seven miles of a logistics center, Coupang is in a position to deliver packages in just 12 hrs, which is essentially drastically superior than Amazon.

This logistics infrastructure provides Coupang tons of optionality, allowing for it to grow into new items and services. It now features fresh new groceries, restaurant supply, and rapid delivery (orders that get there in under an hour) for some of its prospects.

On major of this, it has pulled some techniques from the Amazon playbook by giving a top quality subscription company for devoted shoppers, with a movie streaming provider hooked up to it.

And administration is generating investments internationally in areas together with Japan and Taiwan and has a new fintech software referred to as Coupang Shell out, despite the fact that both of those these tasks are a little part of the small business currently.

Major-line development moreover margin enlargement

As a result of this built-in platform, Coupang has been able to persistently obtain market share in just the increasing South Korean e-commerce field, which is a recipe for swift earnings raises. From 2017 to 2021, its marketplace share in South Korea grew from 7.4% to 15.7% and is likely shut to 20% today when seeking at the figures it place up in 2022.

In the third quarter of 2022, the very last quarter we have publicly offered financial outcomes for, Coupang’s revenue grew 27% year over year in regular currency to $5.1 billion. The company has now generated $20 billion in trailing-12-month revenue.

With the South Korean e-commerce sector projected to expand quickly and hit $291 billion in annual investing by 2025, Coupang has a good deal of home to mature if it can continue to keep getting industry share from the level of competition.

Coupang is not building a lot in net income but is showing potent gross margin enlargement, which means its unit economics are acquiring superior as it scales up. Very last quarter, its consolidated gross margin expanded by 8 percentage points 12 months more than year to 24.2%. More than the extended term, management expects to hit 27% to 32% gross margins and 7% to 10% in altered earnings margins. 

But is the inventory affordable? 

As I publish this, Coupang has a marketplace cap of $29.5 billion. The corporation is nevertheless unprofitable on a web money foundation, making it hard to worth at the instant. Nevertheless, we can make some ahead estimates if we consider management’s economic projections at face value.

If Coupang has 20% of the South Korean e-commerce industry in 2025, revenue will be close to $58 billion that calendar year. Assuming the corporation can arrive at 7% financial gain margins, that equates to $4 billion in 2025 modified earnings.

Adjusted earnings are not the fantastic metric, but even so, $4 billion in earnings a handful of a long time out when compared to a existing sector cap less than $30 billion appears really darn affordable. That would set the inventory at an altered rate-to-earnings ratio (P/E) of just 7.4. 

When even now a risky inventory to personal provided its historical past of unprofitability, Coupang has a wonderful track history for expansion and appears to be to have a promising long term. Which is why it is my beloved e-commerce stock to acquire correct now. 

John Mackey, former CEO of Total Foods Industry, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Brett Schafer has positions in Coupang. The Motley Idiot has positions in and suggests and Coupang. The Motley Idiot has a disclosure coverage.

By Anisa