Kogan.com Ltd operates as a portfolio of retail and services businesses that includes retail, marketplace, mobile, broadband, insurance, and travel. The Company focuses on making in-demand products and services. Kogan.com specialises in consumer brand renowned for price leadership through digital solutions.
KGN had the misfortune of reporting a very impressive set of numbers on a terrible day for tech stocks. KGN exceeded expectations on metrics such as revenue and earnings before interest, tax, depreciation and amortisation (EBITDA), but the stock still had a very rough day. The bad news was that January, the first month after the interim period, only saw sales growth of 45%, which is considerably below the six months preceding. We knew these 100+% sales growth periods would have to end eventually. Anecdotally, Australia has handled the pandemic exceptionally well – it feels like it has largely returned to a pre-COVID existence. Hence, while that 45% growth rate might be a disappointment, it is evidence that the customer acquisitions KGN and other e-commerce retailers have won are at least partly sticking to their newfound habits.
KGN and its peers’ problem is that the stocks have rallied so hard, and any change in customer behaviour to pre-pandemic behaviour would lead to weakening sales growth once we are cycling the very strong sales periods in mid to late 2020. KGN was around $8.00 before the pandemic, and its sales base has effectively doubled, so we need to see that base hold up to consider these e-commerce players good value. The next few months will be critical for KGN, and it will be interesting to see how the stock performs in the run-up to this.
