Kogan.com Ltd (ASX: KGN) will list on the ASX today – with trading to begin at 11am.

The online shopping website has issued 28.4 million shares to investors at $1.80 each, while existing shareholders have retained around 65 million shares. That gives the company a theoretical market cap of $168 million.

That’s far too small for most of Australia’s fund managers, although small-cap fund managers will probably take a closer look.

As we wrote last month, shares aren’t cheap compared to its major competitors JB Hi-Fi Limited (ASX: JBH) and Harvey Norman Holdings Limited (ASX: HVN). The Good Guys is also expected to list on the ASX later this year.

The bullish case for Kogan is that the company appears to be growing faster than both of them, and therefore deserves a higher multiple.

The company is also expanding slowly into other channels such as a reseller of mobile phone plans under the Kogan Mobile brand, and also Kogan Travel. While those are unlikely to become the company’s core focus, if they are successful, they could become an integral part of Kogan’s business. It could also allow Kogan to dip its toe into other channels – where business can be wholly conducted online.

Foolish takeaway

I certainly wish the company all the best and it could go on to become a major player in Australia’s retail industry – perhaps even becoming Australia’s version of Amazon? However, it does face real competition from the incumbents and one has to wonder when the real Amazon will target Australia with the services it currently offers in the US.

 

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Motley Fool writer/analyst Mike King doesn't own shares in any companies mentioned. You can follow Mike on Twitter @TMFKinga

The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.