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Stanley Druckenmiller bets on the theme. Well, he does a lot of other things, but when he invests in individual stocks, he usually buys based on long-term themes spanning multiple years. It’s also worth hearing from the legendary investor and former right-hand man of George Soros, who has produced incredible stock returns over the long term. In his 30 years managing external funds at Duquesne Capital Management, he has achieved an average annual return of 30%. I never have I’m having a down year.
Currently, Mr. Druckenmiller only manages his capital through the Duquesne family office. But he still continues to invest the same way. As of his most recent 13-F filing, the family office had a concentrated portfolio primarily focused on technology stocks. Two of his biggest positions – Nvidia and microsoft — has become a highly profitable bet on the growth of artificial intelligence (AI) and cloud computing. Nvidia is his largest position and Microsoft is his third position. Both account for more than 10% of the family office’s portfolio.
These two stocks are well-known stocks with market capitalizations exceeding $1 trillion. But Mr. Druckenmiller’s No. 2 position is small and does not even operate in his home country of the United States.In stock is Coupang (CPNG -2.71%)is South Korea’s largest e-commerce operator and plans to expand into East Asia. How does Mr. Druckenmiller view Coupang stock? Let’s check it out.
Why Coupang?
Druckenmiller became an investor in Coupang several years before the company went public in 2021, according to CNBC. Druckenmiller has maintained most of his positions since going public, showing he is still bullish on Coupang stock after all these years.
So why is he so bullish? I’ll think of a few things. First, the company operates in the fast-growing field of online shopping in South Korea. Coupang’s revenue was virtually zero a decade ago, but today he has grown to more than $20 billion. The company is rapidly expanding its market share in its home country and has a long way to go to reinvest. South Korea’s commerce market (both offline and online) is approximately $500 billion. As more and more shoppers shift from in-person shopping to online shopping, Coupang still has room to grow if it continues to gain market share in e-commerce.
Secondly, the company has an amazing founder running the business named Bom Suk Kim. Kim founded Coupang and still runs the business as CEO, overseeing its dominance of the Korean market. Founder-led companies have been shown to outperform the average stock price. Investors will be hoping that Beom-seok Kim will remain at Coupang for many years.
Expansion into Taiwan
Coupang started with a focus on its home market of South Korea. Currently, we are gradually expanding to other countries in East Asia. The first is Taiwan, an island nation with a similar geographic density to South Korea. Coupang’s management said in its latest financial report that it is increasing investment in Taiwan in response to the country’s rapid growth. Coupang Mobile’s app is predicted to be the most downloaded app across Taiwan in 2023.
In the short term, a large investment in Coupang could lead to higher losses. Coupang’s Developed Products business unit saw its adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) loss widen to $160 million from $44 million in 2022. But in the long run, Coupang’s revenue and profits will grow. potential. Investors interested in Coupang will want to track its revenue growth from its developing product segments to validate its expansion in Taiwan. Segment revenue increased 41% year over year last quarter.
CPNG market capitalization data by YCharts
Stock prices look extremely cheap
Finally, Druckenmiller is likely still attracted to Coupang because the stock looks cheap. The stock is down 71% from its all-time high, and its market cap is now just $26 billion.
Coupang should generate nearly $25 billion in revenue in 2023, depending on exchange fluctuations between the Korean won and the U.S. dollar. Over the long term, management expects the business’s profit margin to reach approximately 10%. The company has already shown progress in this regard, with net profit reaching a profit margin of 1.5% last quarter despite heavy losses from expansion in Taiwan. The company’s core Agri-Commerce segment had an adjusted EBITDA margin of 6.6% last quarter.
A 10% profit margin on $25 billion in revenue would result in a bottom line profit of $2.5 billion. Compared to its market capitalization of $26 billion, Coupang trades at a forward price-to-earnings ratio of 10.4. Coupang stock appears to be undervalued at these levels for a company with rapid revenue growth (21% year over year last quarter) and such a large market opportunity at hand.
It’s the right time to bet with Druckenmiller. For investors who plan to hold Coupang stock for many years, today looks like a great time to buy Coupang stock.
Brett Schaefer has a position at Coupang. The Motley Fool has positions in and recommends Coupang, Microsoft, and Nvidia. The Motley Fool has a disclosure policy.
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