STOCK WATCH: E-Com Growth +300% Higher than ASX-200

Over the last 90 days, there has been an average of 14.4% growth for ASX listed e-commerce companies, compared to 3.4% growth of the ASX 200. That’s an outperforming of the ASX-200 by 300%. But will it stick?

Redbubble seems to be the biggest contributor to this growth, with shares rising 27.4% in the last three months. MyDeal similarly experienced 24.2% growth. While these numbers are impressive, these growth levels exist because of the major dive in share price last quarter. Over the last seven days, Redbubble has remained stagnant, recording 0% growth, with MyDeal recording 2.7% in the same time period.

Luxury fashion retailer Cettire is the one e-commerce company that seems to have bucked this trend. Its growth over 90 days was 23.4% and over the last week was an impressive 27.5%. It delivered a four-fold increase in sales in its first year on the ASX, and seems to have overcome the market uncertainty that led to a trading pause earlier in the year.

While Cettire may be going against the grain by recording consistent growth, Bike Exchange is making its mark for all the wrong reasons. Compared to Adore’s solid 9.7% growth in the last three months and Booktopia and Kogan both recording 7.3% share price growth over the same time period, Bike Exchange has shed a massive 34% and is the only e-comm company not to experience a boost. Back in June, shares were listed at $0.25. It closed out on Tuesday at $0.17. Bike Exchange recorded an EBITDA loss of $5.96m excluding one-off IPO costs, compared to a loss of $1.54m in FY20. While much of this was reflected in the investments to scale the business, it seems that it was enough to spook investors.

Source: Power Retail Australian Listed E-Comm Index, based on ASX reporting

While Kogan shares initially dropped after its full year announcement, as predicted, this seems to have stabilised. E-Commerce Investor and Founder Adir Shiffman told Power Retail that Kogan was a: ‘a long term cash machine’, noting that investors are still trying to figure out who can generate long-term free cashflow while ‘balancing that with the usual opportunistic short-termism associated with trading activity’. Closing out at $10.87 on Tuesday, as we approach the holiday season it would be a surprise if shares didn’t reach the $13+ highs we’ve been seeing from the company recently. Adore shares have similarly regained momentum, closing at $5.09 on Tuesday after a drop to $4.61 in late August. Again, as we approach the holiday season and rolling lockdowns across Australia continue, the company seems perfectly positioned.

ASX Listed E-Commerce companies are consistently outperforming the ASX-200, but how will the market respond to the current landscape? With whispers of ‘living with the virus’ as the next step, it could be that investors are waiting to see what level of ‘normal’ we return to. But if we’ve learnt anything in the last 18 months, it’s that shopper behaviour has been permanently altered. The surge to online wasn’t just a reactive spend borne out of need. It was a combination of factors that were set in motion years before COVID landed on our doorstep. Years from now, it’s possible the online shopping ‘wave’ we’re experiencing will look like a small ripple compared to what’s coming next.

Figures are current as at close of ASX on 7 September 2021. This is analysis only and not intended as investment advice.

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