Coupang Stock (NYSE:CPNG): Should You Ride This Rocket?

Perhaps you've seen today's stock trend and noticed that Coupang(NYSE:CPNG) stock price is rocketing upward. There's nothing wrong with this momentum, but investors should look closely at the reasons why and then make their own decisions. I'm bearish on CPNG stock, and as we learn more about what's really going on in Coupang, you may decide to look elsewhere for better investment opportunities.

Use the Korean version of Amazon.(NASDAQ:AMZN)Coupang is the easiest way to describe Coupang. It is a popular e-commerce company that offers an order fulfillment service called Rocket Delivery.

Shares of CPNG have been on the rise today, and you may be tempted to go all in on this Korean Amazon. However, it's important to know all the facts before making any investment decisions. After all, a stock can be vulnerable to a reversal if the rally is not reliable.

A bigger company may have been to Coupang.

Before we get to the headlines, there's a situation that potential Coupang investors can't afford to ignore. Specifically, it is rumored that a large company is taking steps to compete directly with Coupang.

This company is much bigger than Coupang - no, it's not Amazon. Instead, it's Chinese e-commerce giant Alibaba.(NYSE:BABA)Coupang has a market capitalization of US$184.13 billion, compared to US$38.16 billion for Coupang.

Here's the scoop from Nikkei news reporter Kotaro Hosokawa (viaTheFly). Apparently, Alibaba plans to invest US$1.1 billion to "create a logistics network in Korea within the next three years". By doing so, Alibaba intends to "utilize low prices and fast delivery" to take on Coupang.

For an e-commerce company, being subject to Alibaba's hypochondriacs in Asia is like being subject to Amazon's hypochondriacs in the U.S., which is bad news for Coupang.

In addition, Alibaba has the financial resources to make trouble for Coupang. This year, Alibaba will reportedly build a logistics center on a 180,000-square-meter plot of land, as well as a call center with 300 employees. In addition, Alibaba plans to establish a "procurement department to sell local products overseas, with the goal of facilitating the export of 50,000 Korean small businesses within three years".

Today, the market is ignoring the news as short-term traders are focusing on Coupang's new developments. That said, big thinkers shouldn't dismiss the power that Alibaba will have over Coupang in the coming years.

Why is Coupang's stock price up 11.5% today?

So what was the catalyst that caused CPNG's stock price to rise 11.5% today? According toThe Korea Timesreported that Coupang plans to raise its monthly membership fee for the Wow service (similar to Amazon's Prime service) to 7,890 won (about $5.74) from the previous 4,990 won.

If this doesn't seem like a big deal, keep in mind that $5.74 can be a lot of money for families in different parts of the world. In addition, the monthly Wow service fee has increased by 58%.

Suffice it to say that Coupang users will now say "Wow" to the "Wow" service, but not a nice "Wow". This may be self-evident, but theThe Korea Times"Many consumers are unhappy with the significant price increases," the company said.

Let's put this in perspective. There's no doubt that some consumers have not been particularly happy with Amazon's Prime membership price increases over the years. However, at least Amazon has made a conscious effort to raise prices gradually, rather than all at once 58%.

My view is that this could backfire. In the near term, stock traders may be overly concerned about the revenue-generating potential of Coupang's Wow service price hike. But Coupang's bottom line could suffer long-term damage if the company loses angry customers. That's the last thing Coupang needs as Alibaba rakes in Coupang's market share in Korea.

Do analysts think Coupang stock is worth buying?

On TipRanks, CPNG is rated a "Moderate Buy" based on 3 buy and 2 hold ratings given by analysts to CPNG over the last 3 months.CPNG has an average target price of $21.75, implying an upside of 2.35%.

If you want to know which analysts to follow when trading CPNG stock, the most profitable analyst covering the stock (over a one-year period) is Morgan Stanley!(NYSE:MS)The average return rate per rating is 16.11 TP3T and the success rate is 891 TP3T for Seyon Park (see below).

Conclusion: Should you consider buying Coupang stock?

Coupang is certainly a fascinating company, comparable to Amazon. However, even the mighty Amazon doesn't have the guts to raise its subscription fees by 58% in one fell swoop, so Coupang's huge price hike is either a smart move, or it's reckless and greedy.

Personally, I don't think this is a good move, Coupang needs to keep its customers happy, especially with Alibaba Wiwaki moving into Coupang's home turf. Therefore, even if CPNG's stock price moves up quickly, I'm not considering holding it now.

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