Redbubble share price rockets 25% higher on COVID-19 update

The Redbubble Ltd (ASX:RBL) share price is rocketing higher on Wednesday after the release of a trading update by the ecommerce company…

| More on:
a woman

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The Redbubble Ltd (ASX: RBL) share price is rocketing higher on Wednesday morning.

At the time of writing the ecommerce company's shares are up 25% to 75 cents.

What did Redbubble announce?

This morning Redbubble provided a comprehensive update on the impact of the coronavirus outbreak on its supply chain, balance sheet, and current trading conditions.

In respect to its supply chain, the company advised that it is globally diverse and has high degrees of redundancy that are expected to endure through the current environment.

Management also advised that its operations and supply chain remain robust with no discernible disruption of the fulfilment and delivery of orders to date.

Redbubble's financial position also remains strong. At the end of March the company had a cash balance of $31 million and zero debt on its books.

Pleasingly, based on its current business performance and cost reduction measures it is taking, the company does not anticipate raising additional capital or taking on debt in the foreseeable future.

Trading update.

Speaking of its business performance, the company provided an update on current trading conditions.

According to the release, from the second week of March and coinciding with the spread of COVID-19 globally, Redbubble began to experience fluctuating demand. Since then, its sales have showed modest signs of contraction on a constant currency basis. Though, the cash impact was minimal due to benefits from currency tailwinds.

In light of this volatility, management does not believe it is in a position to reaffirm its guidance. As a result, it has withdrawn its guidance for year on year operating EBITDA growth and positive free cash flows in FY 2020.

Interim CEO, Martin Hosking, commented: "We are responding to the macro environment and the business signals that we are seeing. We are controlling the levers that we can and have a firm idea of the things we need to do to preserve cash. The underpinnings of the business are strong and we are refocusing the strategy and operations to ensure we can sustain the business and thrive through COVID-19 so that we are best positioned when external circumstances normalise."

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has recommended REDBUBBLE FPO. 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 Scott Phillips.

More on Coronavirus News

Man with his hand on his face looking at a falling share price chart on a tablet.
Share Market News

ASX 200 stocks dive 2.4% in worst trading day since Ukraine crisis hit

It's not a good start to the week for the market.

Read more »

A woman looks nervous and uncertain holding a hand to her chin while looking at a paper cut out of a plane that she's holding in her other hand. representing the falling Air New Zealand share price today
Travel Shares

Borders just reopened so why is the Flight Centre (ASX:FLT) share price falling today?

Experts believe it may take several years for tourism levels to rebound to pre-pandemic numbers.

Read more »

A worker in hi vis gear holds his hand up saying no.
Coronavirus News

Own BHP (ASX:BHP) shares? Here's how the ASX 200 miner is battling COVID

Mining unions have not generally supported mandatory vaccinations.

Read more »

Female worker sitting desk with head in hand and looking fed up
Coronavirus News

Here's what Rio Tinto (ASX:RIO) boss says is 'causing some challenges' right now

The Omicron variant is spreading in Western Australia.

Read more »

A man wearing a mask punches the air with joy after getting a negative COVID result on a rapid antigen test.
Coronavirus News

Why are ASX COVID test shares climbing today?

COVID-19 tests are in focus again today.

Read more »

a girl stands in an apple orchard holding two red apples in raised arms with a happy, celebratory look on her face with a large smile and a pretty country background to the picture.
Economy

CBA reveals the Australian economy's leading state amid COVID surge

The states and territories have all been impacted by the pandemic.

Read more »

Rapid Antigen Test taking place.
Share Market News

Why is Ellume hitting headlines today?

Brisbane-based diagnostics developer Ellume is back in the headlines.

Read more »

A woman looks quizzical as she looks at a graph of the share market.
Share Market News

Inghams (ASX:ING) share price sinks as Omicron bites

Inghams shares are down as COVID hurts its operations.

Read more »