STOCK WATCH: BikeExchange Woes Bring ASX E-Com Index Down

Natasha Sholl By Natasha Sholl | 31 May 2022

In a period that’s been marked by volatility, we’ve seen the E-Com Index stabilise somewhat, with BikeExchange the outlier at -30%.

Bike Exchange recently announced that its CEO, Mark Watkin, would step down, with the Co-Founder and current Board member, Sam Salter, taking over as the acting CEO until a permanent replacement is found. It then issued a Trading Halt and subsequently a Suspension from Quotation pending the release of its announcement regarding material capital raising.

Details of the capital raise include $347,863 from Instiutionalised, sophisticated and professional investors at an issue price of $0.02 per New Share; and a Non-Renounceable Entitlement issue of one new BikeExchange share for every one existing BikeExchange share held by eligible shareholders at an issue price of $0.02 per New Share to raise approximately $6 million (before costs). The funds will be used to ‘support working capital and additional growth initiatives’.

BikeExchange also said it is continuing to evaluate its funding options and is ‘in discussions with a number of potential investors’ regarding a proposed convertible note issue to raise up to $5 million on terms to be finalised.

Yesterday it issued the 17,393,173 fully paid ordinary shares in accordance with its announcement. Unsurprisingly, its share price is down, at $0.027 at the time of writing. Will the change in leadership and capital raise actually be able to save BikeExchange? Whether this is a case of simply needing working capital to weather the COVID storm, or whether the business model is unsustainable moving forward, remains to be seen. As we saw in the GFC, capital raising at times of ASX volatility can be fraught. With its share price steadily declining and concerns over its Q3 performance, it seems it had little choice but to head in this direction (given the alternatives). As at close of ASX on Monday, BikeExchange had shed 88.6% in 12 months (down 30% over 7 days).

ASX Listed E-Com Index

Source: The Power Retail ASX Listed E-Com Index based on ASX reporting for the period

The ASX Listed E-Com Index is actually up 2% in the last week, on par with the ASX200 (up 1.9%). If it weren’t for BikeExchange (-30%) bringing the average down, E-Com would be outperforming the ASX200, showing just how out of step the company is compared to its peers.

The best performer in this period is Cettire, up 5.1% in the last week, to $0.72. It ended the week at close of ASX on Friday at $0.58, with no company announcements to explain the 14c jump (which is noticeable in the current landscape). So too, Redbubble made gains from end of day Friday to end of day Monday (from $0.94 to $1.02) as did Temple & Webster ($4.37 to $4.69). While Temple & Webster came second in terms of performance in the last week (up 4%), Kogan’s performance is also notable (again…in the context of its dismal start to 2022). It is up 2.7% to $3.74. Will this trajectory continue? Or is it just stabilising as e-commerce tries to find equilibrium on the ASX?

Adore Beauty is down 1.4% over seven days to $1.44, and Booktopia is down 8.8% in the same period, to $0.37. MyDeal is up 0.5% to $1.01 (holding steady after news of the proposed Woolworths takeover resulted in a jump from $0.65 to $1.01), and despite Redbubble’s growth since Friday, it’s actually at 0% for the last seven days.

Figures are current as at close of ASX on 30 May 2022. This is analysis only and not intended as investment advice.

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