Redbubble Ltd reports, are the shares a spec buy?

Shares in online marketplace Redbubble Ltd (ASX: RBL) have recovered after being down nearly 5% today in response to results for the year ended 30 June 2016.

Redbubble is new to the ASX but has spent the last decade growing an online network that connects independent artists with buyers of unique clothing, art, stationery, accessories, and homewares. It uses third party fulfillers to create the products and makes a commission on each sale.

Highlights from today’s report included:

  • Revenue of $114.6 million, up 61.2% on 2015.
  • Gross profit of $39.0 million, up 62.0%.
  • EBITDA loss of $8.7 million, up 33.8%.
  • Gross value of marketplace transactions of $142.9 million, up 61.7%.
  • Website visits up 43% to 147.8 million, customers up 53% to 2.2 million, and selling artists up 62% to 154,300.

Redbubble continues to launch new products and international websites, with French and German sites recently launched.

While it is not well known in Australia, Redbubble has done a good job of becoming a popular international brand. It has an impressive 400,000 followers on Facebook, and it appears to be generally well regarded by artists and customers online.

Redbubble was featured in this year’s Tech Pioneers top 50 along with the likes of Freelancer Ltd (ASX: FLN), and XERO FPO NZ (ASX: XRO) – coming in at number 13.


Redbubble reaffirmed its 2017 guidance for $172.2 million in revenue and a gross profit of $58.7 million, up from $39 million, with gross margins maintained at 34%. It is well placed to continue funding growth with over $40 million in cash and no debt.

It has growing repeat customers and low customer acquisition costs, with nearly 70% of sales coming from free sources, primarily search engine traffic.

CEO and founder Martin Hosking is well incentivised to keep things on track, having retained a large stake after the recent IPO equivalent to around 25% of the equity plus some options.

Is it a buy?

Redbubble is yet to reach profitability, has plenty of competition and should be considered speculative.

Shares listed at an IPO price of $1.33. Despite hitting close to $1.50 on the day of listing, they have since trended down as low as $1, and are currently at around $1.14.

As someone who likes to invest in founder-led innovative technology companies with global potential, I purchased a small parcel of shares at $1.03 and am happy to hold for next 5+ years if the growth trajectory continues.

How 1 Man Made 100x His Money After 50

Few know, that as Warren Buffett blew out the candles on his 50th birthday cake, he had just 1% of his current fortune. Think about it: At an age when most give up hope, Buffett was just getting started on the remaining 99% of his fortune. Goes to show you that it's never too late for you to potentially get rich.

Which is why we've gathered the strategies we learned from Buffett, distilled them down to 11 simple lessons, and put it in an exclusive report for you to claim. Just click here to learn more about this handy investing guide.

Motley Fool contributor Matthew Bugden has shares in Freelancer, Xero and Redbubble. The Motley Fool Australia owns shares of Xero. 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.

Two New Stock Picks Every Month!

Not to alarm you, but you’re about to miss a very important event! Chief Investment Advisor Scott Phillips and his team at Motley Fool Share Advisor are about to reveal their latest official stock recommendation. The premium “buy alert” will be unveiled to members and you can be among the first to act on the tip.

Don’t let this opportunity pass you by – this is your chance to get in early!

Simply enter your email now to find out how you can get instant access.

By clicking this button, you agree to our Terms of Service and Privacy Policy. We will use your email address only to keep you informed about updates to our website and about other products and services we think might interest you. You can unsubscribe from Take Stock at anytime. Please refer to our Financial Services Guide (FSG) for more information.