MENU

Why Redbubble is looking like a buy

The Redbubble Ltd (ASX: RBL) share price gained another 6.25 per cent on the last day of trade for 2017, capping off a solid end-of-year run for the online market place’s shareholders.

The company’s share price has more than doubled since late September when Redbubble shares were trading for about 63 cents.

Shares in Redbubble are now going for about $1.53.

The company, with a market cap of about $319 million, was founded in 2006 and provides an online marketplace for artists selling “uncommon designs” on products such as apparel, bags and housewares.

Redbubble listed on the ASX in 2016 but after an initial spurt of investor interest the company’s share price began a rocky descent which eventually ended in September 2017 before recently taking off, as indicated by the figures above.

Investors may have been put off by the company’s lack of profits.

In financial year (FY) 2017, its first full financial year as a public company, Redbubble posted a net loss after tax of $7.6 million, almost 50 per cent higher than the forecasted operating loss of $5.2 million the company had previously provided.

Still, FY 2017’s loss marked a significant improvement for the company’s financial standing when compared to the previous year’s loss of $19.8 million.

Redbubble ended FY 2017 in a “strong” position with $27.8 million cash on hand, according to the company.

And the future is looking good for Redbubble with the company expecting to move into EBITDA profitability during the second half of FY 2018.

For the first quarter of FY 2018 Redbubble said it benefited from “top line growth returning to a level of above 30 per cent on a constant currency basis”.

Redbubble is not the only ASX listed company with a presence in the online retail world to see its share price post strong recent gains.

Kogan.com Ltd (ASX: KGN) share price gained more than 400 per cent last year.

And Ahalife Holdings Ltd (ASX: AHL), an online retailer selling luxury goods, made a late recovery in 2017, gaining almost 10 per cent during the last day of trade for the year.

While Redbubble certainly represents potential, the company’s prospects of continuing to see its share price rise largely hinge on management’s ability to deliver on their forecast of EBITDA profitability during the second half of FY 2018.

The fact the company missed its FY 2017 by almost 50 per cent is a cause for concern.

And if it wasn’t for the lingering doubt concerning the company’s ability to hit its targets Redbubble would be looking like a stronger buy.

The 66,826.77% "wonder share" that shows no sign of stopping

JUST RELEASED! Check out our brand-new free report, "One Stock to Buy and One to Sell in the Age of Amazon"... revealing our #1 recommendation for the future of online retail in Australia AND the #1 stock our experts are convinced you should unload immediately...

Plus, you'll even discover one special bonus recommendation! It's a mind-blowing 66,826.77% winner that we believe will rocket into 2018 and beyond.

Your copy of this timely new report is completely free, so don't miss out. Discover the 66,826.77% wonder stock now. Enter your email address here to discover your brand-new FREE report.

Motley Fool contributor Steve Holland has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Kogan.com ltd. 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.