STOCK WATCH: Rate Rise Another Blow to ASX Listed E-Com Index

On Tuesday, the ASX200 fell after the Reserve Bank increased rates far higher than expected (from 0.35 percent to 0.85 percent), spooking investors. Punters are tipping a back-to-back double RBA rate rise, which means that any rebound on the ASX is likely to be short-lived. While Governor Philip Lowe said the increase was due to the resilience of the local economy, how household spend will actually be impacted remains to be seen. Resilient or not, it’s unlikely to be pretty, and the ASX Listed E-Com Index is feeling the pinch.

Adore Beauty has dropped 23.6% over the last fortnight, closing at $1.15 on Tuesday. After its share price losses, it looks primed to be removed from the ASX All Technology Index in the latest quarterly rebalance. The decimation of the Adore Beauty share price (down 72.2% over the last year), while a result of many factors, has not been helped by its shrinking earnings margin. At the beginning of the month it launched its second private label brand, and given the company is currently prioritising growth (like most in the e-com space), this may not be a turn off for all investors. (Although…given its current performance on the ASX, a substantial proportion aren’t playing the long game.)

Kogan is another company sliding on the ASX, its share price (now at $3.37) at levels not seen since 2019. While it has experienced inventory woes and general stock level volatility thanks to the pandemic, active customers have increased by nearly 2.5 times since 2019. The market response however, has been unforgiving, with a 67.4% loss over the last 12 months. The last fortnight has been more stable (relatively speaking) with with the company shedding 5.9%.

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

Another poor performer is Temple & Webster, closing at $3.87 on Tuesday, marking an 11% drop over 14 days. The company has been holding relatively strong compared to its peers, but it seems the RBA rate rise has impacted its share price quite dramatically. Similarly, at $0.90, Redbubble has shed 10% over the last fortnight, again a reflection of the general e-com landscape.

MyDeal has plateaued at $1.02 after news of the proposed Woolworths takeover in mid-May when it jumped from $0.65. It is the only company on the E-Com Index that has experienced growth over the last year, up 57.4% since the same time in 2021. As a comparison, the average for the E-Com Index overall is -67.9% in the same period. MyDeal will be delisted as part of the Woolworths transition.

After a rough few weeks, with news of Tony Nash departing and Q3 results generally, Booktopia shares have been fairly stable, now at $0.36 (a 6.6% loss over 14 days).

Unlike Booktopia, BikeExchange hasn’t yet stabilised after news that its CEO would be replaced and proposed capital raise offer. It is down a massive 57.5% over the last fortnight, closing at $0.017 on Tuesday. It is offering Institutionalised, sophisticated and professional investors new shares at an issue price of $0.02  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 as part of its capital raise. Given its current share price, things aren’t looking great.

BikeExchange is the worst performer on the ASX, down 37% in the last week. Cettire however, follows closely, down 35.9% over seven days to $0.42. The company has long had question marks over its head. Cettire Founder and CEO Dean Mintz sold a stake in the company in March, pocketing around $47 million, which has done nothing for its share price woes.

While MyDeal is understandably the best performer in this period (at 0% in seven days), Kogan comes in second place, with a 5.9% loss in the last week. The E-Com Index (down 10.7% over the last week) is underperforming compared to the ASX200 (down 1.6% in the same period).

Figures are current as at close of ASX on 7 June 2022. This is analysis only and not intended as investment advice.

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