Why the Cettire (ASX:CTT) share price is rebounding 9% today

It has been an eventful week for this online retailer…

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woman in trolley representing rising retail share price

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The Cettire Ltd (ASX: CTT) share price was out of form on Tuesday and crashed lower before being paused from trade.

The online luxury goods seller’s shares were down 21% to $1.98 before the pause.

Positively, the Cettire share price has returned to form on Wednesday. At the time of writing, it is up 9% to $2.16.

Why did the Cettire share price crash lower?

The decline in the Cettire share price appears to have been driven by concerns over its business model and the authenticity of the products it sells.

ASX Ltd (ASX: ASX) took notice of this decline and quizzed the company on it.

How did Cettire respond?

The share market operator asked Cettire why its shares might have crashed 21% on Tuesday.

It responded: “Cettire believes that the 11 June article in the Australian Financial Review may explain the recent trading in CTT securities, in particular today’s price movement.”

However, it refuted the article’s concerns and defended its business. The company explained: “Cettire has developed a unique and compelling no inventory business model, leveraging proprietary technology and processes, which collectively enable a high degree of automation and scalability.”

“Cettire has confidence in the sustainability of its supply chain and the authenticity of the products available on its platform. Cettire sources products from a large and diversified global network of suppliers, with what it believes is minimal concentration risk. Cettire’s supply network has continued to grow since IPO,” it added.

Management also confirmed that it doesn’t have any product suppliers based in China and is not intentionally blocking brand owners from seeing their products and prices on its platform.

It said: “Cettire’s platform is not currently accessible in certain markets as the Company prioritises its global expansion. It is incorrect to assert that this is to prevent brand owners, many of whom are multinational organisations, from seeing products and prices on its platform. The Company is not aware of any restrictions or restraints that would prevent it from operating in markets where it is not currently operating in the future.”

Guidance outperformance

Potentially giving the Cettire share price an extra boost today is management’s comments on its guidance.

It notes that its previous guidance was for sales revenue of at least $80 million. Whereas it is now expecting sales revenue for FY 2021 to be at least $85 million.

The Cettire share price is up 340% since the start of the year despite its recent blip.

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James Mickleboro does not own any shares mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended Cettire Limited. The Motley Fool Australia has recommended Cettire 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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