STOCK WATCH: Rebound? What Rebound?

Natasha Sholl By Natasha Sholl | 09 Mar 2022

Sorry, we jinxed it. Last week we flagged there were signs of a rebound for the ASX Listed E-Com Index, but…this week? Not so much.

Last week we said that it looked like the ASX Listed E-Com Index had bottomed and there were signs of a rebound. Half-year results announcements had been made and (after share price dips across the board) it looked like online retailers had been forgiven for their sins (their sins being that pandemic growth levels had not been matched year-on-year). Inventory and fulfilment issues appeared to have stabilised and the major e-commerce players had flagged their plans for growth and retention. Consumers are clearly still reliant online and the digital space seemed once again to be a place full of opportunity and potential. Even events both locally and globally seemed not to have shaken investor confidence too much. For the first time in a long time, the E-Com Index was outperforming the ASX200. Things were looking up. Or so it seemed.

We spoke too soon. The optimism of last week has been replaced with…existential despair? Horror? Carnage? Chaos? Look, it’s not pretty.

Kogan closed at $5.35 on Monday, just ahead of the 52-week low of $5.26 in late February. This was after the company reported a 1.3% lift in revenue for the six months ending 31 December to $419.5 million and a 17.3% decline in revenue to $325.7 million.

Similarly, Adore’s share price dropped to $2.00 at close of ASX on Tuesday, a loss of 55.6% over 90 days. Ouch. Temple & Webster lost 38.5% over the same time period, down to $6.55.

ASX Listed E-Commerce Index 14 days

Source: Power Retail Australian Listed E-Comm Index, based on ASX reporting for the period

Booktopia is now under the $1 mark, closing at $0.95 on Tuesday, marking a 52-week low and a drop of 55.6% over three months. Booktopia CEO, Tony Nash, said that first-half results reflected the challenges of meeting strong demand while lockdowns and supply chain constraints limited productivity and at the same time investing for the future. The group reported an EBITDA of $4.1 million for HY22 down from an underlying EBITDA of $8.0 million (adjusted for IP and underlying costs) for HY21, down 49%. Its share price initially remained steady after its results announcement but has now dropped 15.2% over the last seven days.

BikeExchange has plateaued at $0.08 (down 55.9% over 90 days). Cettire and RedBubble have dropped a similar percentage over the same time frame, with luxury clothes site Cettire down 53% to $1.79 and independent design marketplace Redbubble down 55% to $1.59.

The flood recovery efforts are still underway and the human and economic toll is yet to be fully realised. Furthermore, concerns stemming from Russia’s war in Ukraine has resulted in inflationary pressures, rattling global equities and causing tension closer to home. There’s a very real sense of consumers holding their breath and waiting for what’s next, and the economic fallout from these major events (not to mention still being very much immersed in a pandemic that is far from over) means the ASX (and the E-Com Index specifically) has understandably been impacted.

While we aren’t seeing the rebound there were (potentially, maybe) signs of last week, we are seeing some level of correction, with Kogan shares inching up slightly from Monday to Tuesday (from $5.35 to at $5.52). Whether this is a change in direction or simply a levelling out after its noticeable slump last Friday and Monday remains to be seen. Other companies seem to be either holding (BikeExchange at $0.08 for example) or dropping (Adore from $2.06 to $2.00 from Monday to Tuesday).

Given this, the ASX Listed E-Com Index is severely underperforming compared to the ASX200, with E-Com losing 11.1% over seven days, compared to the ASX200 at -1.6%. The best performer in the last week is MyDeal, down 4.9% to $0.58 and the worst performer is Redbubble, shedding 19.1% in the same period.

Figures are current as at close of ASX on 8 March 2022. This is analysis only and not intended as investment advice.

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