Cettire's founder has pocketed over $47 million after releasing shares, but the company's performance is leading to some raised eyebrows.
We’ve seen in the last few months that the performance of e-commerce shares has largely followed the pattern of tech stocks generally. While the e-commerce and tech-sector understandably benefited from pandemic related growth, we’ve seen both the tech and e-com sectors get slammed after investors abandoned ship. Whether it was fear of rising rates, uncertainty around future growth potential, or simply a matter of institutional investors favouring other sectors in this late-pandemic era (‘new normal’, anyone?) is unknown. But what we do know is that we’ve started to see a rebound.
The market has somewhat stabilised in the last few weeks, raising questions whether the massive sell-offs we saw was simply an overreaction. While e-commerce is hardly at what we’d call peak performance on the ASX, that it has been somewhat swept up into the tech category and subject to the same investor sentiment, means that we’re now seeing a reprieve.
But not all e-commerce stocks are benefitting from this (albeit slight) rebound. Kogan and Adore Beauty are up 4.1% and 3% in the last fortnight (at close of ASX last Friday), Temple & Webster is up 1.5% in the same period, and MyDeal is up 6% in the last seven days. Even BikeExchange is up 1.7% (to just $0.06, mind you). Booktopia’s 0.6% dip in the last fortnight may not be the growth it had been hoping for, but it does seem like the company has in a bit of a wait-and-see holding pattern where investors are concerned. on 31 March the company released a statement that non-executive director Marina Go had resigned, and confirmed the upcoming appointment of Judy Slatyer (most recently CEO of Australian Red Cross). Redbubble is similarly down 5% in the last seven days, to $1.53. Cettire is the outlier here, shedding 13.8% in the last week, to $1.12 (a new 52-week low). For a company that was valued at $3.67 at the start of the year, it’s a noticeable drop.
A quarter of the 251,238,220 escrowed Cettire shares were released in February this year. The market was watching to see if Cettire founder and CEO Dean Mintz would sell any of the 62.8 million shares that had come out of escrow. In late March, the company released a statement confirming that Mintz had agreed to sell down 35 million shares in the company (representing 9.18% of the Company’s issued capital). The sale was undertaken at a price of $1.35 per share in a block trade. Mintz will retain a 56.72% shareholding in the company and remain its largest shareholder.
Mintz has continued to be a somewhat baffling figure in the e-commerce world. Where the personalities of founders are so often interweaved in their brands (think Kate Morris, Ruslan Kogan, Tony Nash et. al.), Mintz’s lack of visibility is noticeable.
After offloading the shares (and pocketing over $47.2 million), Mintz said: ‘Cettire is a huge part of my life, it has a phenomenal market opportunity and I remain full committed to lead the Company to grow shareholder value. The sale represents a small portion of my shareholding and I will remain Cettire’s largest shareholder. The sale enables greater trading liquidity and a broadening of the share register and I look forward to welcoming new shareholder to the Company.’
Following this, the company’s biggest institutional holder, Cat Rock Capital Management LP, topped up its stake to 11.72% (up from 9.77% in February). The direct purchase of 7,407,407 shares came to over $10 million.
Following the announcements, Cettire shares continued to dive. The company has been under pressure since its peak in November 2021 (after a stellar recover mid-last year when concerns were raised about its ‘longer term prospects’). It seems that these concerns may still linger.
Source: ASX Listed E-Commerce Index based on ASX reporting for the period to 1 April 2022
The ASX Listed E-Commerce Index underperformed compared to the ASX200, down 2.7% compared to the ASX which gained 1.2%. The best performer for the last seven days was MyDeal, up 6%, with Cettire the worst performer at -13.8%.
Figures are current as at close of ASX on 1 April 2022. This is analysis only and not intended as investment advice.
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