Why is Coupang stock soaring today?

Coupang (NYSE: CPNG)The stock grew today on reports that the South Korean e-commerce company was increasing its similarAmazon Membership fee for Prime Wow service.

As of 12:39 p.m. ET, the company's stock price had risen 10% on the news.

Coupang La Grande Leverage

according toThe Korea TimesReports that Coupang is raising the monthly fee for Wow members by 58% to $5.74 per month.

The move was controversial for being too aggressive, but should help Coupang's profit margins by allowing it to expand Wow benefits such as free shipping, free returns, streaming media services and free food delivery. The company has 14 million Wow members by the end of 2023.

It also seems to have been done to allow Coupang to have a better chance of getting in touch with his wife and children.Alibaba, capital of Pakistan (Tw)The Company is well positioned to compete with its Chinese competitors.

Since launching its Wow membership service nearly three years ago, Coupang has now nearly quadrupled the price of membership, which has caused some dissatisfaction among users, but the company argues that the savings from Wow membership far outweigh the cost of the membership.

Coupang's next step

Coupang has adopted an e-commerce business model similar to Amazon's, and Prime has become a "core pillar" of Amazon's business. In fact, even if Amazon raises its prices significantly, it is hard to imagine that Prime will lose a lot of customers.

Investors should be concerned about whether Coupang will be hit by a backlash, but Wow still seems underpriced considering its strengths. It also makes sense to invest in the service for long-term growth.

The e-commerce company seems to have a lot of potential, especially as it expands its business beyond Korea. With that in mind, it's not surprising that investors are reacting favorably to the news.

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John Mackey, former Chief Executive Officer of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's Board of Directors. Jeremy Bowman owns shares of Amazon.com. The Motley Fool recommends Amazon.com and Coupang. The Motley Fool recommends Alibaba Group. The Motley Fool has a disclosure policy.

Why is Coupang stock soaring today?