Could Buying Coupang Stock Today Set You Up for Life?

Coupang (NYSE: CPNG), a Seattle-headquartered technology company, has been embroiled in the fallout from a data breach in its main market of South Korea that is hurting its reputation. Investors, nervous about uncertainties facing the business, have decided to sell off Coupang stock amid South Korean government hearings and investigations into the company's security practices.

The stock is down 26% in the past year. While what's going on should not be ignored, investors focused on the long term are being given a gift with this current Coupang stock drawdown.

Here's why buying this stock today could set you up for life.

Data breach and taking the long view

Late last year, Coupang revealed that information from up to roughly 34 million accounts had been exposed in the data leak after first saying the incident had been much smaller. The South Korean government launched an inquiry, and Reuters reported that in mid-December Coupang CEO and Chairman Bom Kim skipped a parliamentary hearing on the data breach. Reuters reported this week that South Korean officials blame "management failure, rather than a sophisticated cyberattack" for the data leak.

This has turned into a bigger scandal than it needed to be, with Coupang making things worse.

Again, this is not something investors can just ignore. However, as with most data scandals, it is more likely than not that most Coupang customers will have forgotten about this event a few years down the line. As long-term focused investors, this is what we care about.

At the same time, Coupang's business in South Korea continues to perform admirably. Net revenue grew 20% year-over-year in constant currency last quarter, along with 10% growth in active customers and positive free cash flow. Its e-commerce platform with a vertically integrated delivery network, similar to Amazon's, continues to delight customers with rapid delivery times and a wide product selection. Most customers will care more about this convenience compared to their information potentially being leaked.

Image source: Getty Images.

Why Coupang stock could set you up for life

After experiencing this drawdown, Coupang now trades at a market cap of $32 billion. It has revenue of $33.66 billion, and management believes it can eventually grow to an adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) margin of 10% or more.

If revenue keeps growing in the double digits, the company can eventually reach $40 billion in annual revenue and maybe even $50 billion within a few years, especially given the potential of its new venture in Taiwan. A 10% profit margin on $50 billion in revenue is $5 billion in earnings.

Using a market cap of $32 billion, that is a price-to-earnings ratio of just 6.4. For a business with a wide moat, strong growth characteristics, and a healthy balance sheet, now looks like a great time to buy Coupang stock, regardless of the ongoing data scandal.

Brett Schafer has positions in Coupang. The Motley Fool has positions in and recommends Amazon. The Motley Fool recommends Coupang. The Motley Fool has a disclosure policy.