It looks like the Kogan.com Ltd (ASX: KGN) share price started off the new year by falling off a cliff. Its shares are down 25% year-to-date, compared to its relentless $4 to $25 run last year.
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Why is the Kogan share price struggling?
The biggest fall in the Kogan share price came about on 29 January, when the company announced a business update for 1H FY21. The update recorded strong numbers with gross sales up 96% over the prior corresponding period. This translated to gross profit being up more than 120% and earnings before interest, tax, depreciation and amortisation (EBITDA) soaring 140%. Despite a report that reads well at face-value, Kogan shares took an 11.50% dive that day.
The market had a similar reaction to the company's full-year results announced on 26 February. Its shares were once again sold down by 8% to hit a 9-month low around $14.40.
Many ASX ecommerce and retail shares that have experienced significant growth thanks to COVID have slumped in recent weeks as well.
The Redbubble Ltd (ASX: RBL) share price experienced a similar reaction where its shares took a 13% dive on the day of its half-year result. The results also read well with strong growth across all its key metrics.
In more recent days, the JB Hi-Fi Limited (ASX: JBH) share price shed its 10% year-to-date gains and is now down 8% for the year.
Clearly Kogan isn't alone it its recent sell off.
What are brokers thinking?
On 1 March, Credit Suisse dropped its Kogan share price target from $21.08 to $20.85 but maintained an outperform rating. The broker notes that the company's results were ahead of the initial guidance provided in the 1H FY21 business update. On the same day, UBS held a neutral rating but also reduced its share price target from $17.90 to $15.10.
Kogan's full-year outlook
Kogan expects to see further growth in its exclusive brands while continuing to enhance and develop its ecosystem.
The company was unable to provide a concrete guidance for the second half of FY21, but noted that it will provide regular business updates during the year.
It revealed that January 2021 unaudited management accounts show year-on-year growth for gross sales, gross profit and adjusted EBITDA by a respective 45%, 102% and 90%.
It might be worth noting that its January figures are lower than its 1H FY21 results (on a percentage basis) where gross sales, gross profit and adjusted EBITDA increased by a respective 97.4%, 126.2% and 184.4%.
