The Kogan (ASX:KGN) share price has nearly halved in 2021

Despite being a market darling during Australia's COVID lockdown last year, the Kogan (ASX:KGN) share price has nearly halved in 2021.

| More on:
asx share price cut represented by scissors cutting through $100 note

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

So far, 2021 has not been kind to this online retailer with the Ltd (ASX: KGN) share price losing almost half its value year to date.  

Shares in Kogan started the year at around $19, before hitting a 2021 high of $21.67 in late January. Since then, the Kogan share price has tanked by more than 44% after dropping another 0.58% so far today.

At the time of writing, shares in Kogan are trading at $12.09.

Let's take a look at what's been happening for Kogan.

What's with the Kogan share price?

Kogan emerged as a market darling during Australia's COVID-19 lockdown last year. Cashed up consumers flocked to Australia's largest online retailer as many people worked from home or avoided large public spaces. As a result, the Kogan share price bolted to all-time highs.

However, in 2021 many investors have lost interest in the online retailer.

The catalyst can be traced back to late January when the company released a business update for the first half of FY21.

Kogan reported a 96% increase in gross sales over the prior corresponding period. It also reported a 120% increase in gross profit and boasted a strong balance sheet with a cash balance of $78.9 million.

Investors were not impressed with the slower rate of growth, sending the Kogan share price 5% lower for the day. However, Kogan noted that the slower growth was mainly attributed to warehouse capacity issues which had been resolved in the short term.

How did Kogan perform for the first half of FY21?

The second catalyst that prompted investors to sell their Kogan shares was the company's first-half report.

For the six months ended 31 December, the company reported a 97.4% increase in gross sales to $638.2 million and an 88.6% jump in revenue to $414 million. Despite record spending on marketing, Kogan also reported a 165% increase in net profit of $23.6 million.

The retailer also highlighted a 77% year-on-year increase in active customers to 3 million. In addition, it noted strong growth in its Kogan First loyalty program. It appears these numbers also failed to excite shareholders. 

What is the outlook for Kogan?

For the second half of FY21, Kogan plans to further expand its exclusive brands. In addition, the company continues to enhance and develop Kogan Marketplace and its active customer base.

The company did not provide earnings guidance for the full year, rather opting to provide regular business updates.

Kogan also faces a few headwinds in the short term with rising bond yields. As bond yields rise, investors will be looking to have greater exposure to traditional value companies and sectors hit by the COVID-19 pandemic.

Nikhil Gangaram has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of ltd. The Motley Fool Australia has recommended ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on ⏸️ Investing

Close up of baby looking puzzled
Retail Shares

What has happened to the Baby Bunting (ASX:BBN) share price this year?

It's been a volatile year so far for the Aussie nursery retailer. We take a closer look

Read more »

woman holds sign saying 'we need change' at climate change protest

3 ASX ETFs that invest in companies fighting climate change

If you want to shift some of your investments into more ethical companies, exchange-traded funds can offer a good option

Read more »

a jewellery store attendant stands at a cabinet displaying opulent necklaces and earrings featuring diamonds and precious stones.
⏸️ Investing

The Michael Hill (ASX: MHJ) share price poised for growth

Investors will be keeping an eye on the Michael Hill International Limited (ASX: MHJ) share price today. The keen interest…

Read more »

ASX shares buy unstoppable asx share price represented by man in superman cape pointing skyward
⏸️ Investing

The Atomos (ASX:AMS) share price is up 15% in a week

The Atomos (ASX: AMS) share price has surged 15% this week. Let's look at what's ahead as the company build…

Read more »

Two people in suits arm wrestle on a black and white chess board.
Retail Shares

How does the Temple & Webster (ASX:TPW) share price stack up against Nick Scali (ASX:NCK)?

How does the Temple & Webster (ASX: TPW) share price stack up against rival furniture retailer Nick Scali Limited (ASX:…

Read more »

A medical researcher works on a bichip, indicating share price movement in ASX tech companies
Healthcare Shares

The Aroa (ASX:ARX) share price has surged 60% since its IPO

The Aroa (ASX:ARX) share price has surged 60% since the Polynovo (ASX: PNV) competitor listed on the ASX in July.…

Read more »

asx investor daydreaming about US shares
⏸️ How to Invest

How to buy US shares from Australia right now

If you have been wondering how to buy US shares from Australia to gain exposure from the highly topical market,…

Read more »

⏸️ Investing

Why Fox (NASDAQ:FOX) might hurt News Corp (ASX:NWS) shareholders

News Corporation (ASX: NWS) might be facing some existential threats from its American cousins over the riots on 6 January

Read more »