ASX Listed E-Commerce shares are outperforming the ASX200. But in the current environment, is it something that can be maintained?
Households are tightening their spend, consumer confidence is low, there’s speculation of another RBA rate rise next month, inflationary pressures are rife, and evacuation orders are in place across parts of NSW due to flooding. Things are…dire. While this kind of landscape has previously resulted in the ASX Listed E-Commerce Index experiencing a massive dive, the last few days have actually seen impressive uplift across (almost) all e-com companies. In fact, the E-Commerce Index has grown 2.9% in a 14-day period, outperforming the ASX200, which is up 1.6% in the same timeframe.
Booktopia has (somewhat incongruously) come under scrutiny in recent times, and yet seems to be proving the naysayers wrong. It is now one of the strongest performers on the Index, up 13.2% in the last fortnight, to $0.215 at close of ASX yesterday. It’s far from to $1+ we were seeing earlier in the year, but in the context of its listed peers, it’s encouraging to say the least.
Also encouraging is Redbubble’s 17.2% growth in the last 14 days, to $0.99. At $3.07, Kogan also seems to be making a comeback, up 3.7%.
Source: ASX Listed E-Commerce Index based on ASX reporting for the period
The only company on the Index not following this upwards trend is Temple & Webster, which is down 1.4% over the last two weeks, to $3.48. It is however up in the shorter term (2.05% in the last 5 days) meaning it is trending in the same direction as other e-commerce companies.
The best performer in this two week period is Bike Exchange, up a massive 55% to $0.031. Last week, we covered how the high volume of BikeExchange securities traded triggered some questions from ASX compliance. The company responded to those queries saying that it was “not aware of any information concerning it that has not been announced to the market which, if known by some in the market, could explain the recent trading in securities”. BikeExchange’s share price jumped from $0.02 on 21 June to $0.045 on 27 June. It has now stabilised somewhat, at $0.031, with no real explanation to account for its recent growth. The company could only place this trading behaviour in the context of a recently appointed new director and completion of the entitlement offer announced on 21 June as well as the pending announcement of its shortfall shares.
Adore Beauty is up 1.9% to $1.10 over the last fortnight, with Cettire up $0.405 in the same period. MyDeal is understandably steady at $1.03, after the proposed Woolworth acquisition. In fact, apart from MyDeal and BikeExchange, there have been no announcements that could otherwise account for the uplift across the majority of e-commerce companies, especially in the context of inflationary pressures and general consumer unease. It may simply be that investors are more optimistic about the reliance on e-commerce ahead of what is predicted to be another COVID wave in late July and early August. Although, it would probably be wishful thinking to believe that investors will hold the course after FY22 results announcements. While we know the pressure that has been placed on online retailers in the current landscape, and it’s doubtful that full-year results will do much to encourage investor confidence, what we do know is that now is the time for innovation and resilience across the e-commerce space. We’ve seen movement in leadership, with CEOs stepping aside or stepping down to allow room for a fresh perspective with another leader at the helm. (And as we’ve flagged previously, we expect to see more companies follow suit, especially post-FY22 results.) We’ve seen industry support for peers (and competitors) with the knowledge that now is the time to bunker down and weather the next storm. There’s no doubt that the coming months will be tough, but there’s nothing unprecedented about the challenges ahead.
While the recent uplift to the ASX Listed E-Commerce Index is indeed encouraging, it does seem like the calm before the storm.
Figures are current as at close of ASX on 6 July 2022. This is analysis only and not intended as investment advice.
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