STOCK WATCH: E-Com Index lifts, outperforms ASX200

E-Commerce stocks have had a stellar fortnight on the ASX, with the E-Com Index gaining 12.6% compared to the ASX200 which is up 3.2% in the same period.

Cettire is the best performer, up an astonishing 70.4% in the last 14 days. It closed at $1.21 on Monday. Last week’s Stock Watch was titled Cettire’s $5.5 million adjusted EBITDA, are investors impressed? and at the time, the answer to the question was….sort of (??). We didn’t see much movement in the Cettire share price in the immediate aftermath of the Q1 update, with shares closing at $0.84 on the day of the announcement last Tuesday (up from $0.83 the previous day). Things started to heat up later in the week, hitting $1.05 at close on Thursday. It looks to be gaining this afternoon, meaning it’s definitely one to watch. Is it a delayed response to news its adjusted EBITDA of $5.5 million was achieved on a delivered margin greater than 20%, as well as the announcement of sales revenue growth exceeding 70% on the prior corresponding period (PCP)?

CEO and Founder Dean Mintz said at the time: ‘Cettire continues to demonstrate strong profess on its strategy to grow penetration of the large global luxury goods market. Our marketing initiatives and commercial offering are resonating with customers and we observed an acceleration in revenue and AOV growth into the quarter end, providing confidence in our Q2 outlook.’

Mintz also added that Cettire’s strong Q1 performance ‘highlights the advantages of our proprietary software-driven automation and uniqueness of our business model, benefiting from a highly flexible cost base, low overheads and minimal inventory exposure.’

It’s certainly possible Cettire has received a bump due to what the market considers to be a strong Q1. We’ve flagged before the questions raised around its business model, which it claims to be unique while appearing….pretty standard TBH. Also the emphasis on its proprietary software seems to be have a bit of a he-doth-protest-too-much vibe. But again, its Q1 results speak for themselves, and what they say is compelling.

Source: ASX Listed E-Commerce Index based on ASX reporting for the period

In the last fortnight, Temple & Webster is up 11.1%, Kogan is up 9.2% and Adore Beauty is up 6%. It’s not a 70.4% Cettire level boost, but it does seem to reflect a higher level of confidence in retail and the tech sector more generally, especially in the lead up to Christmas. While recent data breaches could have made investors nervous about the e-commerce space, it seems this hasn’t eventuated.

While online retail performance on the ASX has been fairly bleak in the last year, it seems much of this was related to posturing about what ‘might’ happen, rather than based on what was happening at the time. And yet, now with interest rate rises tipped to continue well into next year and the pressure on consumers higher than ever, investors seem to be slightly more confident in the e-com space. Essentially, we know what we’re dealing with, and both investors and consumers seem buoyed.

Redbubble, Booktopia and BikeExchange shed in the last fortnight (down 1.5%, 4% and 10% respectively). These companies (as with many on the E-Com Index) seem to be in a state of flux.

Despite this, recent performance seems to indicate we’re heading for a strong peak season as we edge closer to November sales events and Christmas spend.

Figures are current as at close of ASX on 17 October 2022. This is analysis only and not intended as investment advice.

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