Why has the Kogan (ASX:KGN) share price plummeted 10%?

The Kogan (ASX: KGN) share price has plunged 10.4% this morning after the online retailer's latest quarterly business update.

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The Kogan.com Ltd (ASX: KGN) share price has plummeted in early trade today, dropping 10.4% in the opening moments. That comes after the Aussie online retailer's latest business update highlighting "strong growth" in multiple metrics.

At the time of writing, the Kogan share price is trading at $11.17 apiece. 

What's driving the Kogan share price?

Kogan this morning provided an update for the quarter ended 31 March 2021 (Q3 2021).

The Aussie conglomerate reported a more than 47% increase in group gross sales, comprising both Kogan.com and Mighty Ape. Kogan is integrating Mighty Ape after acquiring the Kiwi online retailer for $122 million in December 2020. 

Kogan Group grew by more than 65% during the quarter with gross profit up more than 54% after another strong quarter.

Kogan.com revenue grew by more than 41% with growth across the board. That includes Exclusive Brands growth of 63% and Marketplace revenue up more than 100%. Third Party Brands and Kogan Mobile revenue grew by more than 13% and 23%, respectively.

Kogan reported fluctuating customer demand during the quarter as the company increased its inventory levels. That saw the retail group incur higher storage and demurrage fees for the quarter which could have investors watching the Kogan share price closely.

Adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) declined by more than 24% during the quarter. That was thanks to increased operating costs and significant investments in marketing and people. There were also increased costs arising from the Mighty Ape acquisition and equity-based compensation expenses.

The Kogan share price is one to watch this morning following the update on its business and customer numbers. Active customers grew by more than 77% to 3,215,000 for Kogan.com with a further 742,000 active customers for Mighty Ape.

Shares in the Aussie retailer performed strongly in 2020 as online retail boomed during the coronavirus pandemic. The Kogan share price is up 78.1% in the last 12 months prior to this morning's open.

However, the company has seen a 42.5% decline in its valuation since 25 January and is currently trading with a $1.3 billion market capitalisation.

Motley Fool contributor Ken Hall has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Kogan.com ltd. 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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