The Redbubble Ltd (ASX: RBL) share price has delivered Afterpay Ltd (ASX: APT) like returns after soaring more than 1000% from March trough to today's peak. After an outstanding FY21 first quarter trading update, is it too late to buy the Redbubble share price?
Record first quarter FY21
Redbubble is in a prime position to leverage the global opportunity presented by the shift to online activity and increasing adoption of e-commerce platforms. It delivered an outstanding FY21 first quarter trading update with Q1 revenue increasing 114% to $175.8 million and an EBIT of $22.1 million compared to a $1.5 million loss in Q1 FY20.
The company's products are diverse across T-shirts, accessories, stationery and stickers, artwork, homewares and other apparels. T-shirts and accessories contributed to 56% of its revenues in Q1. The accessories segment experienced more than 500% revenue growth in Q1 year on year, likely to be driven by the increased purchases of face masks.
North America contributes to more than 70% of the company's revenue. Other regions such as Europe, the UK and ANZ contributed 12%, 10% and 6% respectively. All major regions delivered triple digit growth excluding the EU.
Moving forward, the company is focused on 4 key initiatives to generate ongoing profitable growth. This includes:
- Artist acquisition, activation and retention
- User acquisition and transaction optimisation
- Customer understanding, loyalty and brand building
- Further physical product and fulfilment network expansion
Is the Redbubble share price a buy?
It's a tough call for the Redbubble share price as it soared more than 1000% since its March lows without taking any breathers. The increasing number of COVID-19 cases in major economies around the world and the upcoming US election could increase the general market volatility in the near term. This could make Redbubble susceptible to sharp sell offs and profit-taking.
Notwithstanding the risks to the broader market, Redbubble delivered an outstanding Q1 FY21 update and paints a roadmap to profitability. The company maintains a strong balance sheet with $58 million in cash as at 30 June 2020. It is also trades at a cheaper revenue multiple than US-listed competitor, Etsy.
Foolish Takeaway
I would prefer the Redbubble share price to take a breather and healthy pullback before considering it a buy. However, given the strong Q1 FY21 update, it appears that the share price is likely to stay near record high levels or continue to push higher. If you're a believer of the Redbubble business, I would pay closer attention to its share price for any buying opportunities.
