Is it bad news that the Temple & Webster (ASX:TPW) share price lost 26% over a week?

The Temple & Webster share price has been on a downward slide since the day of its AGM, losing 26% over a week. Is it time to sell?

| More on:
Two men react in shock at Evolution share price drop record profit

Image source: Getty Images

Temple & Webster Group Ltd (ASX: TPW) has seen its shares fall by 6.7% today. This means the Temple & Webster share price has lost 26.3% since the market opened on Tuesday last week. The slide began with the company AGM. While there has undoubtedly been some profit taking, many investors appear to be unnerved by insider selling of the two founders. 

Nonetheless, the quarterly update was beyond expectations. The company’s earnings before interest, tax, depreciation and amortisation (EBITDA) for the September quarter was greater than all of FY20. Year to date revenues were also up, this time by 138% versus the previous corresponding period.

Moreover, retail NAB online sales index suggests the homewares and appliances category grew around 57% during the months of April to July. Meanwhile, Temple & Webster grew by 150% at the same time.

Is the Temple & Webster share price fall a problem?

CEO Mark Coulter recently spoke out about the company, its growth, and the recent share sales. The company’s stellar growth during FY20 was undoubtedly due to the much-talked-about shift to online shopping during the COVID-19 pandemic. However, Mr Coulter believes there is an air of inevitability about it. He believes it is only a matter of time before the company is larger than both Ikea and Harvey Norman Holdings Limited (ASX: HVN) in Australia. 

In an interview with Ticky Fullerton, in The Australian, Mr Coulter said:

In the very early days it did accelerate fairly quickly. Then like all businesses it reached a hard bit, you get all the scaling problems and then we jumped again. We bought a couple of our competitors, we did a jump, we listed, then we went back to the drawing board and thought about what the new Temple & Webster is.

It’s really the last few years that everything has worked together. It feels like the site is good, the range is good, the team is good, our customers services is good, our delivery experience is good and that’s made the Temple & Webster you see today.

Foolish takeaway

There are a number of takeaways that may impact the Temple & Webster share price. First, despite the founders selling off shares, the company is currently performing better than it has at any time in its history. Second, the times appear to suit the company. It has benefited from the pandemic shift to online shopping. Third, and finally, the company CEO clearly has a high level of ambition for the company.

According to its AGM presentation, Temple & Webster remains dedicated to regularly adjusting its product range, and deepening its digital advantage. 

Wondering where you should invest $1,000 right now?

When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for more than eight years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

Scott just revealed what he believes could be the five best ASX stocks for investors to buy right now. These stocks are trading at near dirt-cheap prices and Scott thinks they could be great buys right now.

*Returns as of August 16th 2021

Daryl Mather has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of Temple & Webster Group Ltd. The Motley Fool Australia has recommended Temple & Webster Group 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