Coupang (NYSE:CPNG) reports third-quarter results early next month, and profit will matter more than sales. In the second quarter, its adjusted EBITDA margin was 1.8%, down from 5.0% a year earlier.
But sales look better than that headline suggests, because Coupang makes most of its sales in Korean won and reports in dollars. Revenue rose 4% in dollars and 10% at constant currency, which removes the effect of exchange rates. The sales recovery looks real, and the stock only works if profit follows. Coupang is also one of the 8 Best NYSE Stocks with Huge Upside Potential.
The company is a Korean online retailer that also runs restaurant delivery (Eats), video streaming (Play) and the luxury marketplace Farfetch. Its core retail business, which it calls Product Commerce, is the only segment that earns an adjusted EBITDA profit.
Sales Growth Is Faster Than It Looks
Product Commerce grew 8% at constant currency in the second quarter, far faster than its growth in dollars. It had 24.7 million active customers, up from a year earlier, and each customer spent more once exchange rates are set aside. If you’re looking for growth stocks with lower share prices, check out 10 Best Growth Stocks Under $50 to Buy Now.
Even so, the pace is well below Coupang’s past. Over the past five years, revenue grew about 23.6% a year, and the constant-currency rate is a clear step down from that. For shareholders, that means dollar-reported revenue understates what the business is doing in Korea.
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Shoppers Stayed Through the Data Breach
The more surprising fact is that customers did not leave. Reuters reported that South Korea’s privacy regulator fined Coupang over a leak of customer data, the largest data breach penalty the country has imposed on a single company. Coupang apologized but said the decision did not fully reflect the steps it had taken to protect customers.
Yet the number of active customers kept growing. That suggests shoppers value the service more than they punish the company for the breach. The newer businesses also grew faster than the core: Developing Offerings, which holds Eats, Play and Farfetch, expanded faster than retail at constant currency. It also lost $219 million at the adjusted EBITDA level, though that was a smaller loss than a year earlier, so it can’t yet carry the company’s profit.
Profit Margins Have Dropped Sharply
Product Commerce’s adjusted EBITDA margin fell sharply from a year earlier, and that segment is where Coupang earns what profit it has. Gross margin slipped too, so the pressure shows up in what each sale earns before overhead. About $410 million of penalties from Korean regulators made the quarter look worse still. Investors who want companies already earning solid profits can see our ranking of 12 Most Profitable Cheap Stocks to Buy Right Now.
Fines sit outside what Coupang counts as normal costs, but they do not explain the margin drop, because adjusted EBITDA leaves them out. The company-wide margin did improve from 0.3% in the first quarter, so the direction is better. Even so, 1.8% is thin next to the 5.0% of a year ago, and Coupang has not yet shown it can rebuild profit while sales grow.
The Price Assumes a Profit Rebound
Consensus estimates for 2027 put Coupang at 51.65 times earnings, well above the sector median of 15.51 but far below its own five-year average of 183.34. No meaningful multiple exists for 2026, and the figures rest on adjusted earnings, which leave out the Korean fines. For investors looking for cheaper growth, our list of 10 Undervalued Growth Stocks to Buy Now is worth a look.
For someone holding the stock, that multiple means paying a premium to the sector for earnings that have not arrived yet. Management is still buying: Coupang repurchased $459 million of its own shares in the quarter.
So can profit catch up with sales? At constant currency, sales have already recovered, but margin has not. The third-quarter report is the first chance to see whether the company-wide margin moves meaningfully above its second-quarter level while customers keep growing.
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This article is originally published at Insider Monkey.
