Kogan (ASX:KGN) share price rises 9% on trading update

Kogan.com provided a business update this morning for its trading in the month of August. The Kogan share price is up 9% today to $20.88.

| More on:
illustration of digital hand pressing bu

Image source: Getty Images

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

Early this morning, Kogan.com Ltd (ASX: KGN) provided the market with a business update in relation to its August performance. As a result, the Kogan share price surged to a high of $20.97 in the opening minutes of trade before pulling back. At the time of writing, the Kogan share price is up 8.58% to $20.88.

What does Kogan do?

Kogan operates a portfolio of retail and services businesses that includes Kogan Retail, Kogan Marketplace, Kogan Mobile, Kogan Broadband, Kogan Insurance and Kogan Travel. The parent company is a leading Australian consumer brand renowned for price competitiveness through its digital offering.

Kogam.com focuses on making in-demand products and services more affordable and accessible to everyday consumers.

What’s moving the Kogan share price?

The Kogan share price has been on the rise as the online retailer announced active customers grew to 2,461,000 for the period ending 31 August. This represented an increase of 152,000, and the largest monthly increase in the history of the business.

In addition, the company noted that gross sales and gross profit soared by more than 117% and 165% year on year, respectively. This was underpinned by marketing costs which reflected the company’s largest monthly marketing investment

Adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) jumped 466% over the prior corresponding year.

Kogan advised it will provide the next monthly business update at its annual general meeting on 20 November.

Should you invest?

The Kogan share price has had an impressive run in the past 24 months. A shift in consumer behaviour towards online sales has seen the retailer’s revenues and profits soar. Since its March 2020 low, the Kogan share price is up over 500%.

With a market capitalisation of more than $2 billion, I think the Kogan share price is currently overvalued. Kogan has a price-to-earnings (P/E) ratio of 80.6 and a dividend yield of 1.01%.

Despite the current growing demand for online sales, I believe that Kogan’s phenomenal results will subside. Government support payments like JobKeeper and JobSeeker will soon be reduced and could affect online purchasing levels. In light of this, I will be searching for other opportunities in the market.

Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of Kogan.com ltd. 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 Scott Phillips.

More on Share Market News

A woman with a sad face looks to be receiving bad news on her phone as she holds it in her hands and looks down at it.
Share Fallers

Why AGL, Fisher & Paykel, Inghams, and TPG shares are sinking today

These ASX shares are falling heavily on Friday...

Read more »

a woman holds her hands to her temples as she sits in front of a computer screen with a concerned look on her face.
Bank Shares

What’s moving the CBA share price this week?

CommBank shares traded ex-dividend on Wednesday this week.

Read more »

A woman stands on the roof of a city building as papers fly in the sky around her.
Share Market News

Here are the 3 most heavily traded ASX 200 shares on Friday

We take a look at the most traded ASX 200 shares today...

Read more »

A young woman wearing overalls and a yellow t-shirt kicks one leg in the air showing excitement over the latest ASX 200 shares to hit 52-week highs
Share Gainers

Why Accent, Cochlear, Newcrest, and Santos shares are charging higher today

These ASX shares are ending the week strongly...

Read more »

Two scientists in a Rhythm Biosciences lab cheer while looking at results on a computer.
Share Gainers

This ASX healthcare company just got FDA approval, and its share price is soaring 18%

Invex Therapeutics is exciting the market today after announcing some big news.

Read more »

Three kids with attitude
52-Week Highs

3 ASX All Ordinaries shares cracking new highs on Friday

These three All Ords shares are smashing new highs on Friday...

Read more »

Two men in suits face off against each other in a boing ring.
Cryptocurrencies

The Aussie-born crypto platform taking on Ethereum

A new platform is being launched by a 25-year-old Aussie millionaire.

Read more »

Three businesspeople leap high with the CBD in the background.
Energy Shares

Why is the Whitehaven Coal share price leaping 7% to a record high?

The coal producer is finishing this week on a high note.

Read more »