The Federal Reserve event came and passed without much volatility last week as stocks were mostly quiet. For the week, the S&P 500 fell 0.5%, the Dow lost 0.2%, and the Nasdaq declined by 0.3%. But yesterday’s 3% run-up in the S&P 500 and nearly 4% in the Nasdaq – fueled by a 90-day pause on U.S.-China tariffs – may have signaled a turning point for the market. Stay tuned.
The Stock – Coupang (CPNG)
Known as the “Amazon of South Korea,“ Coupang is one of that nation’s leading e-commerce platforms, featuring same-day (or next-day) delivery for millions of items, including apparel, fashion and beauty products, electronics and fresh groceries. It’s also popular in other Asian markets like China and Hong Kong, with recent expansions into Singapore, Malaysia and Japan (where it’s focused mainly on food delivery through its Coupang Eats service).
The company impressed across a number of key metrics in Q1, led by revenue of almost $8 billion that grew 21% on a currency-neutral basis, while gross profit was up 31% and EBITDA boomed 36% (margins are surging here), and accounting earnings (which recently turned positive) lifted 20% and easily topped estimates.
The Seattle-based company (it relocated its headquarters to the U.S. in 2022) reported solid results across all its business segments, with Product Commerce sales rising 16% and Developing Offerings (including Eats, Play, Fintech, and Farfetch) soaring 78% to $1 billion. During last week’s earnings call, the company also highlighted its generation of $1.5 billion in adjusted EBITDA and over $1 billion in free cash flow over the trailing 12 months; it also announced a $1 billion share repurchase program as part of its broader capital allocation strategy. The top brass further noted that it’s focused on expanding Coupang’s signature Rocket Delivery service to provide more customers with hyper-fast delivery across a greater product selection, which it said creates a “virtuous cycle” of increasing customer loyalty and spending, while also expanding partnerships with major global suppliers (including most recently Coke, Pepsi and P&G).
Looking ahead, the company projects 20% currency-neutral revenue growth for 2025, based on “stable consumer behavior” and macroeconomic conditions, and it sees its investments in the Taiwan market as being a key long-term growth driver. Wall Street expects earnings to grow 36% this year and boom further in 2026.
Technical Analysis
CPNG had a nice run from major support near 13 in early 2024 to 27 or so last fall before stalling out; it commenced a multi-month slide that took the stock just under the 40-week line in January and, after a rally phase, a nosedive to 19 as the market cratered. But CPNG snapped back on higher volume initially, which is a good sign, and last week’s Q1 report brought shares back to their old highs. Stop – 22.5
The Covered Call Trade
Buy Coupang (CPNG) Stock at 26, Sell to Open June 26 Strike Calls (exp. 6/20) for $1, or a Net Price of 25 or less
Static Return: $100 per covered call (4%)
Breakeven: 25
Covered Call Return (if assigned): $100 per covered call (4%)
Please note, the stock and options prices will be moving throughout the day, so these prices are simply an approximation of prices that you should be able to achieve.
However, the important component of this equation is that the stock price paid, minus the premium received via the call sale, equals the approximate Net Price, or 25 or less. (In this case 26 minus 1 = 25. Or another example is you could pay 26.20 for the stock and sell the call for 1.20 , which also equals 25.)
For every 100 shares of stock you buy, you can sell 1 call. For every 200 shares of stock you buy, you can sell 2 calls. And so on …
Open Positions
| Stock Name and Symbol | Price Bought | Current Stock Price | Stop | Option - Price of Call Sold | Current Option Price |
| AngloGold Ashanti (AU) | 35.75 | 40.5 | 30 | May 36 -- $2.10 | $4.50 |
| Monster Beverage (MNST) | 57 | 61 | 51 | May 57.5 -- $2.65 | $3.50 |
| Comstock Resources (CRK) | 19.2 | 23 | 17.5 | May 19 -- $1.70 | $4.00 |
| Uber (UBER) | 75 | 87 | 63 | May 70 -- $7.55 | $17.00 |
| Toast (TOST) | 36 | 45 | 32.5 | May 36 -- $2.60 | $9.00 |
| ATI (ATI) | 67.8 | 74 | 54.5 | June 67.5 -- $4 | $8.00 |
The next Cabot Profit Booster issue will be published on May 20, 2025.
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