There are some fast-growth ASX tech shares that have been sold off in recent weeks and could be worth thinking.
However, there are also some ASX tech shares that have been falling despite reporting growth:
Redbubble Ltd (ASX: RBL)
The Redbubble share price has fallen 11% since 16 March 2021. Redbubble shares have been heading downwards over the last few weeks as markets worried about interest rates and inflation, and investors responded to Redbubble’s half-year result.
Redbubble is an e-commerce platform where people can buy artist-designed products.
Excluding a positive delivery date adjustment, Redbubble saw marketplace revenue (paid) growth of 90% to $343 million, gross profit (paid) growth of 102% to $138 million and earnings before interest and tax (EBIT) of $35 million, up from $0.20 million in the prior corresponding period.
Redbubble saw marketplace revenue (paid) growth of 66% (or 82% in constant currency terms) in January 2021.
The Redbubble CEO Michael Ilczynski said:
The strategic priority for the group now is to ensure we extend the market leadership we have established. We intend to invest in both the artist and customer experiences, to improve loyalty and retention and to ensure long-term growth.
The ASX tech share is going to focus on four key initiatives to continue growth. Number one is artist acquisition, activation and retention. The second is user acquisition and transaction optimisation. Third, customer understanding, loyalty and brand building. Finally, it’s looking for further physical product and fulfilment network expansion.
Morgans rates Redbubble as a buy and has a price target of $6.64.
Netwealth Group Ltd (ASX: NWL)
The Netwealth share price has fallen by 18% since 19 March 2021.
A large part of the decline came about when the ASX fintech share announced to the market that the agreement with Australia and New Zealand Banking Group Ltd (ASX: ANZ) in relation to the interest payable on the total pooled cash transaction account is to be terminated in 12 months on 24 March 2022. The agreement provides a margin of 95 basis points above the overnight cash rate and will continue for 12 months.
Netwealth is in negotiations with ANZ and other banks to establish an alternate facility and deposit rate.
The FY21 half-year result included a number of different positive growth metrics. Earnings before interest, tax, depreciation and amortisation (EBITDA) grew 30.1% to $40.5 million, with the EBITDA margin increasing from 53.1% to 56%.
Platform revenue went up 24.1% to $13.8 million, with net profit after tax (NPAT) rising by 34.5% to $27.6 million.
Netwealth is expecting to keep growing thanks to growth of its industry, as well as taking more market share. The ASX share also expects to benefit from ongoing industry consolidation and change.
Between 31 December 2020 and 15 February 2021, funds under administration (FUA) went up by another 4.9% to $40.7 billion.
Citi rates Netwealth as a buy with a price target of $16.10.
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Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of Xero. The Motley Fool Australia owns shares of Netwealth. The Motley Fool Australia has recommended Dominos Pizza Enterprises Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.
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