Coupang’s Stock Surges as Emart’s Plummets

The divergence in stock performance between e-commerce leader Coupang and the offline retail giant Emart is deepening. Throughout this year, Coupang’s stock has continued to rise as its growth prospects become more prominent, while Emart has seen its stock plummet to its lowest point amid an increase in short selling positions.

According to the New York Stock Exchange and the Korea Exchange, Coupang’s stock has risen by 23 percent year-to-date until the end of August. In contrast, Emart’s stock declined by 25 percent during the same period. On Aug. 18, Emart’s stock even hit a new low at 71,000 won (US$53.73). Although it has experienced a slight rebound since then, it remains in the low 70,000 won range. Emart’s market capitalization stands at approximately 2 trillion won, which is only about one-twentieth of Coupang’s.

In the securities industry, it is increasingly perceived that Coupang has solidified its position as the dominant player in e-commerce, leveraging its network effect with services like “Rocket Delivery.” Consumers are becoming accustomed to Rocket Delivery, reducing the perceived necessity of visiting offline stores.

The shift in consumer behavior is also reflected in Coupang’s financial performance. In the second quarter of this year, Coupang reported an operating profit of 195.1 billion won. After successfully turning a profit in the third quarter of last year, Coupang has achieved over 100 billion won in operating profit for four consecutive quarters. On the other hand, Emart saw a significant decline in operating profit from 100.7 billion won in the third quarter of last year to 12.8 billion won in the fourth quarter. Furthermore, Emart experienced a deficit with a loss of 53 billion won in the second quarter of this year.

The market anticipates that the divergence in stock performance between Coupang and Emart will likely continue for an extended period. According to Korea Investment & Securities, Coupang is expected to achieve an operating profit of 626 billion won next year, showing a 35 percent increase from this year. Despite Coupang’s price-to-earnings ratio (PER) being around 70 times based on this year’s expected performance, reflecting the recent surge in its stock price, it is projected to drop to approximately 38 times based on next year’s expected performance.

Emart’s price-to-book ratio (PBR) has dropped to 0.1 times and short selling positions are accumulating. Securities firms have been consistently lowering their target prices for Emart. The average target price for Emart, which stood at 132,357 won at the end of February, has recently fallen to 96,667 won.