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STOCK WATCH: Redbubble Takes a Hammering But is E-Com Poised for a Rebound?

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By Published On: January 19, 20220 Comments

In a year that digital reigned supreme, 2021 didn't deliver on the ASX. Is current underperformance a sign that we're set for a bounce back?

On Tuesday, Redbubble’s share price took a massive hit, closing at $2.32, a 52-week low, following the release of its trading update. Gross Profits in the six months to the end of December fell by 25% with expectations that full year FY22 Marketplace Revenue would be below FY21 levels. EBITDA fell 84% to $8 million. In previous outlook statements, the company had noted its marketplace revenue growth was likely to be negative due to ‘the cycling of strong prior year numbers’, though flagging this in advance did little to diminish the swift market response.

Redbubble’s update also included a record cash balance of $143 million. Chief executive Michael Ilczynski said: ‘I am confident of the tremendous potential for the Redbubble Group. To capture this, we will continue to invest in our technology platforms, artist and customer experiences, and our brands. We have multiple growth levers at our disposal, and given our strong cash balance, we will continue to invest in order to realise the potential upside that can be unlocked by aggressively pursuing this opportunity.’ Yet this cash balance and potential for future growth hasn’t allayed investor concerns, its share price down 27% over 90 days.

While many say Kogan is set for rebound after falling out of favour with investors last year, its share price is still lagging. It closed at $7.42 on Tuesday, not far off its 52-week low of $7.20 back in December 2021 and far from the high of $21.67 back in January 2021.

Is the the rock bottom from which we’ll now see a recovery?

Shedding 48.6% over 90 days, Booktopia has now plateaued at $1.29 with investors seeming to take a wait and see approach. Adore Beauty has had a positive (relatively speaking) start to the year after a slump in December, closing at $4.15 on Tuesday, up 9.7% over 14 days.

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

Temple & Webster has also experienced a slump, down 16.2% over 90 days to $9.13 at close of ASX on Tuesday. Like Kogan, Adore and Booktopia, the dip seems to be more general dissatisfaction with the tech and e-com sector rather than being specific to the online retailer.

Cettire shares have dropped by 11.1% over the last seven days. In FY21, year-on-year sales revenue increased by 304%, exceeding prospectus forecast by 32%. Yet is this ‘explosive growth’ signalling to investors that it has peaked? That’s what the current share price would seem to indicate, yet it’s early days.

At $0.17 Bike Exchange is now stable, up 24.1% over the last week, though far from the $0.20+ we were seeing prior to August last year.

With omicron sending consumers back online (combined with the last two years supercharging growth of e-commerce) the underperformance of the Australian Listed E-Com Index is perhaps surprising. While there have been general challenges (such as supply chain, inventory management) across the board as well as specific challenges that are more retailer-specific, the outlook for the industry as a whole, both in the short term and longer term, is overwhelmingly positive. For many companies (Temple & Webster, Kogan, Adore, Booktopia) it appears that shares at their low-points might be a sign that it’s time to buy. Is it time for a bounce-back, or is poor performance a sign of things to come?

Figures are current as at close of ASX on 18 January 2022. This is analysis only and not intended as investment advice.

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About the Author: Natasha Scholl

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