The Redbubble Ltd (ASX: RBL) share price has popped today, up 5.06% at the time of writing to $4.57 a share. Redbubble shares closed at $4.38 yesterday and opened at $4.40 today before climbing to the current share price. The S&P/ASx 200 Index (ASX: XJO) is up 0.4% today (at the time of writing), so Redbubble is evidently doing a lot better than the broader market today.
It's been a bumpy month for the Redbubble share price, on top of what has been an indisputably fantastic year for the company.
Redbubble was a $1.09 stock at the start of 2020 and fell as low as 40 cents a share in the COVID-19-induced market crash in March. But the shares have been hot property ever since. Between 23 March and 20 October, Redbubble shares climbed from a low of 40 cents to a high of $6.02 – a gain of 1,405%. However, the shares have cooled somewhat since then, and have fallen more than 24% from that peak on today's prices, including 19% over the past month.
So what is Redbubble? And why is the Redbubble share price so volatile these days?
What is Redbubble?
Although it only floated on the ASX back in 2016, Redbubble has been around since 2006, when it was founded in Melbourne. It's an art-focused company that, in the company's own words, aims to "give independent artists a meaningful new way to sell their creations". The company tells us that "today, we connect over 700,000 artists and designers across the planet with millions of passionate fans".
So how does this 'connecting' process work? Redbubble operates as a virtual marketplace of sorts. Artists (or aspiring artists) 'open a shop' on Redbubble's online marketplace, virtually stocked with whatever artworks or designs they have created. Customers can then 'buy' these designs or art, and have them printed on a variety of mediums. These can be anything from a conventional print or 'painting' to having mugs, phone cases, t-shirts, stationary, pillowcases or (more on this later) masks emblazoned with the art/design (Redbubble offers more than 60 products). The consumer pays for the art, the creator gets a royalty, and Redbubble, as the middleman/enabler, gets the rest.
What's been happening with Redbubble shares in 2020?
Redbubble has clearly been on its own train in 2020, experiencing massive appreciation, as well as volatility. To illustrate the latter point, the shares are up close to 5%, and 4% more than the ASX 200, despite no news whatsoever out of the company. Even so, they remain down 19% over the past month, as we mentioned earlier. My Fool colleague James Mickleboro discusses how this was likely due to the rotation out of 'COVID-19 shares' earlier this month here.
So why this volatility? Well, a short answer is that this is a high-octane growth share by the numbers. And those kinds of shares are usually, by nature, volatile.
Some impressive numbers
By the numbers, I'm referring to Redbubble's latest performance numbers that the company gave us in a quarterly update last month (for the quarter ending 30 September).
In this update, Redbubble told investors that quarterly marketplace revenue came in at $147.5 million, which was up 122% on the prior corresponding period. Profits were even better, rising 149% to $64.5 million against the same benchmark. Sales were strong across all of Redbubble's key markets. Australia and New Zealand sales were up 125% in the quarter, while United Kingdom sales were up 122% and North America up 102%.
In terms of the coronavirus pandemic, the company has managed to make lemonade with that proverbial lemon. In the update, management advised that a good portion of the sales growth had been driven by a spike in demand for face masks on its platform as a result of the pandemic. It reported a 562% increase in accessories sales during the quarter. This appears to have been driven mostly by increasing demand for trendy/fashionable face masks. Accessories reportedly now account for ~27% of sales on its marketplace.
With numbers like that, it's no surprise that this is a high-flying, if volatile, share.
