Can the Redbubble (ASX:RBL) share price continue its run in 2021?

The Redbubble (ASX: RBL) share price was among the best performing ASX e-commerce shares of 2020 on the back of booming online sales.

| More on:
asx share price rise represented by man holding bunch of balloons soaring through the air

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

The e-commerce sector in Australia and New Zealand went from strength to strength in 2020.

According to the Salesforce Holiday Insights Hub and 2020 Holiday Predictions report, as reported by CMO, e-commerce sales increases in the region were the highest in the world, surging by 108% and 107% respectively in the second and third quarters of 2020.

The report reinforces the narrative that the coronavirus pandemic is continuing to impact shopping habits, with shoppers increasingly turning to online retailers. On that note, let's take a closer look at the Redbubble Ltd (ASX: RBL) share price, one of the best performing ASX e-commerce shares of 2020. 

Redbubble share price outperforms in 2020 

Redbubble shares were among the top performing ASX shares of 2020, gaining nearly 400%.

Redbubble provides independent artists a platform to sell their creations and has enjoyed strong consumer demand for its unique and customised products. The company's business model is powered by its loyal and growing artist community. New artists contribute to Redbubble's marketplace growth, while more established artists provide sustained revenue for the platform. 

Changing retail landscape 

During its October 2020 annual general meeting, Redbubble highlighted several long-term retail trends that have emerged amidst COVID-19. The company quoted a number of consulting reports and publications including: 

  • Forbes, which said that after this crisis consumers will be more discerning with discretionary purchasing and will seek meaningful purchases, particularly made-to-order.
  • McKinsey, which highlighted the out-of-date sourcing model of the fashion industry which is characterised by long lead times, large order sizes and relatively low flexibility. It said that a transformation was needed, particularly in making sourcing more demand-driven and more sustainable on social and environmental dimensions.
  • Which PLM, which sees on-demand manufacturing as a possible solution to overstocking risks as well as facilitating reductions in inventory costs and lead times.

According to Redbubble, it is in a strong position to leverage these trends by meeting consumer desire for customisation, delivering products created by independent artists and providing a large product range manufactured on-demand. 

Accelerating revenue growth 

Redbubble's revenue accelerated through the second half of FY20. Its revenue for the month of July surged 132% on the prior corresponding period. The company's growing scale and global footprint has translated into a 141% year-on-year increase in operating earnings before interest, tax, depreciation and amortisation (EBITDA) from $6.3 million in FY19 to $15.3 million in FY20. The company expects further profitable growth and recent macro shifts in online activity to accelerate its growth momentum.

Foolish takeaway

The Redbubble share price has started 2021 with a boom, jumping by almost 8% today so far. It will be interesting to see whether the above mentioned trends continue to benefit the company in 2021 and how this is reflected in the Redbubble share price. 

Motley Fool contributor Lina Lim has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on Retail Shares

A businessman looking at his digital tablet or strategy planning in hotel conference lobby. He is happy at achieving financial goals.
Retail Shares

3 reasons this broker thinks Woolworths shares are a cheap buy

Is this supermarket giant being undervalued by the market?

Read more »

A woman sits on sofa pondering a question.
Retail Shares

ASX retail shares mixed amid modest April sales growth

What does the latest sales data mean for ASX retail shares?

Read more »

Man on a laptop thinking.
Broker Notes

Why did Goldman Sachs just downgrade Wesfarmers shares?

The ASX 200 conglomerate has had a ripper run of share price growth. So why is Goldman Sachs downgrading it?

Read more »

Woman checking out new iPads.
Retail Shares

Dump 'em! Top broker says sell these 3 ASX retail shares

This comes amid high interest rates, weak retail sales, and persistently negative consumer sentiment.

Read more »

A woman looks at a tablet device while in the aisles of a hardware style store amid stacked boxes on shelves representing Bunnings and the Wesfarmers share price
Retail Shares

What is the price target for Wesfarmers shares?

Is there further success coming for this retail giant?

Read more »

A laughing woman pushes her friend, who has her arms outstretched, in a supermarket trolley.
Retail Shares

Goldman says these 6 ASX retail shares are a buying opportunity

The latest retail trading data was historically weak, according to the Australian Bureau of Statistics.

Read more »

Woman checking out new laptops.
Retail Shares

Are JB Hi-Fi shares still a buy as growth slows?

Is this stock worth a bargain basket buy?

Read more »

Young people shopping in mall and having fun.
Opinions

I'd buy these ASX retail shares if economic fragility starts a fire sale

An economic hiccup could present a golden opportunity to buy these quality retailers.

Read more »