The Kogan.com Ltd (ASX: KGN) share price has been experiencing a very strong rally. After dropping as low as $3.45 in mid-March, Kogan shares are now trading at $8.75, a massive 153.6% increase. In comparison, the S&P/ASX 200 Index (ASX: XJO) has seen a much more modest increase during this period.
So, is it too late for investors to take a stake in Australia's largest locally-based, online specialist retailer?
Strong March quarter and record customer growth in April
Kogan released a trading update in April indicating that it saw a very strong 30% increase in gross sales and a 23% jump in gross profit during the March quarter. The final month of March saw particularly strong growth, with sales increasing by more than 50% on the prior corresponding period (pcp). The company also experienced its largest-ever monthly increase in active customers since its IPO.
Kogan revealed that it was able to successfully navigate through the disruptions caused by the coronavirus in all of its key markets.
Due to the harsh lockdown restrictions, there has been a surge in online spending at specialist retail sites such as Kogan and Amazon. In particular, Kogan has seen a strong rise in the sales of home office equipment, such as PCs and laptops, as well as home fitness equipment.
This ramp-up in sales accelerated further in the month of April, with sales growing by more than 100% in April compared to the pcp.
Profits during April were even more impressive, with gross profit growing by more than 150% and adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) increasing by more than 200%. This boost in sales during April meant that Kogan's adjusted EBITDA was up by a very impressive 40% financial year to date compared to the same period last financial year.
This strong result was achieved despite the company heavily investing to build its brand, with overall operating costs increasing by 37% during the March quarter.
Kogan continues to invest in its proprietary marketplace platform. It revealed that its pipeline for new sellers in the Kogan Marketplace remains strong and continues to grow despite its rapid onboarding of new sellers.
Is it too late to invest in Kogan?
With Kogan's recent share price rally, I don't think it offers investors compelling value at present, but it is still worthy of consideration as a long-term buy and hold option.
Kogan remains well-placed to leverage the growing adoption of online shopping, the increasing popularity of its Kogan-branded products and in particular, its fast-growing Kogan Marketplace.
Additionally, the company's expansion into a broad range of verticals, including internet, mobile, energy, credit cards, super, travel, insurance and cars, provides it with a diversified business model and a wide range of future growth opportunities.
