Redbubble (ASX:RBL) share price climbs 4% today

The Redbubble share price has tumbled in 2021 and one fund manager is adding to their position.

| More on:

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

The Redbubble Ltd (ASX: RBL) share price has had a rough run in 2021, but today it surged 4.27% to $3.91.

Investors ran for the exit back in April when the ecommerce company unveiled plans to sacrifice profit margins to deliver its 'aspirational' $1.25 billion revenue vision.

Such an increase in revenue would represent a doubling in Redbubble's current annual revenue.

However, since June the company has been crawling its way out of what appears to be a bottoming in the Redbubble share price, with one fund manager seeing the company as a significant opportunity.

Let's take a look…

Fund manager sees opportunity

EGP Capital is a Sydney-based fund manager that invests in Australian-listed companies with smaller market capitalisations. Typically, the fund holds 25 to 35 stocks, usually with the 5 largest holdings making up 50% of the portfolio.

Redbubble is hovering around the sixth largest position in the EGP Capital Concentrated Value Fund.

According to EGP's May report, the fund took advantage of the negative sentiment towards the Redbubble share price and added to their position.

Explaining the rationale behind the optimism to investors, EGP said in its report:

RBL is an incredible marketplace, the likes of which are seldom created and even more rarely available at the type of value investors pricing the market is currently ascribing to the business. ETSY has just acquired a business which appears to be meaningfully inferior to RBL for more than twice RBL's current market capitalisation. If the market does not soon wake up to the opportunity RBL currently presents, it may suffer a similar fate.

EGP appears to be referring to the peer-to-peer social shopping app, Depop.

Depop recorded $650 million in gross merchandise sales and $70 million in revenue in 2020, with a 10% take rate. Etsy Inc (NASDAQ: ETSY) is acquiring Depop for US$1.625 billion.

By comparison, in its Q3 FY21 update, Redbubble reported $577 million in gross transaction value year-to-date. Additionally, the company pulled $456 million in revenue.

Redbubble has a market capitalisation of $1.026 billion based on today's closing price.

The Redbubble share price is down 34% year-to-date but is up 65% over the past 12 months.

Other Redbubble share price news

The Redbubble share price looks unfazed by the recently announced inquiry launched by the Australian Competition and Consumer Commission (ACCC).

The inquiry will examine the practices of online marketplaces such as eBay Australia, Kogan.com Ltd (ASX: KGN), and others. It will particularly focus on the relationships with third-party sellers and consumers and how they affect competition.

Lastly, Redbubble will report its FY21 full year results on 19 August.

Investors will keep their eyes peeled for that one!

Motley Fool contributor Mitchell Lawler has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of and has recommended Etsy and Kogan.com ltd. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has recommended eBay and has recommended the following options: short October 2021 $70 calls on eBay. 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.

More on Share Gainers

A young boy wearing a hat, sunnies and striped singlet looks fierce and flexes his arm in victory.
Share Gainers

Here are the top 10 ASX 200 shares today

It was certainly a day to remember for ASX investors this Friday...

Read more »

Three girls compete in a race, running fast around an athletic track.
Share Gainers

Do you own the 3 best performing ASX 200 shares of FY 2025?

The top three ASX 200 shares have already gained 13% to more than 20% in FY 2025!

Read more »

Woman looks amazed and shocked as she looks at her laptop.
Share Gainers

Why Immutep, Kingsgate, Netwealth, and Ora Banda shares are storming higher

These shares are ending the week with a bang. But why?

Read more »

Fancy font saying top ten surrounded by gold leaf set against a dark background of glittering stars.
Share Gainers

Here are the top 10 ASX 200 shares today

ASX investors enjoyed a day to remember this Thursday...

Read more »

Man pointing at a blue rising share price graph.
Share Gainers

3 ASX All Ords shares rocketing over 10% today

Investors are buying these shares with fever today.

Read more »

rocket taking off indicating a share price rise
Share Gainers

Why did this ASX mining stock just explode 203%?

Investors are sending the ASX mining stock to the moon on Thursday. But why?

Read more »

two men smiling with a laptop in front of them, symbolising a rising share price.
Share Gainers

Why Ora Banda, Paladin Energy, Seven Group, and Telix shares are charging higher

These shares are shining brightly on Thursday. But why?

Read more »

A woman wearing a black and white striped t-shirt looks to the sky with her hand to her chin contemplating buying ASX shares today as the market rebounds
Share Gainers

Would I be crazy to buy DroneShield shares now at over $2?

After soaring more than 700% in a year, can DroneShield shares keep flying high?

Read more »