Shares in the e-commerce marketplace closed at a 5-month high of $4.24 last Friday but are still down about 23% year-to-date.
Redbubble’s year-to-date performance reflects the company’s mixed performance overall.
At face value, its FY21 results highlight a rapidly growing company with a 58% increase in marketplace revenue to $533 million and 930% jump in earnings before interest, tax, depreciation, and amortisation (EBITDA) to $53 million. This translated to a massive swing in net profit from a loss of $9 million in FY20 to a profit of $31 million.
However, its fast growth comes at a cost.
Back in April, Redbubble said its short-term EBITDA as a percentage of marketplace revenue is expected to be in the mid-single digit range as the company executes on targeted investments at the gross margin, marketing and operational expenditure lines.
The Redbubble share price sold off sharply in the wake of its weaker near-term margins, sliding 23% to $4.24 on the day of the update.
In an article featured on Livewire, Chris Stott from 1851 Capital and James Gerrish from Market Matters take a closer look as to whether the Redbubble share price is a buy, hold or sell.
What do experts think about the Redbubble share price?
Gerrish looks past the company’s volatile performance in FY21 and rates it as a buy.
“The marketplace seems to be working. So it’s working because it’s getting more customers on it and that’s attracting more merchants, which gives more variety and that’s leading to more multiple purchases.”
“So after a tough ’21, I think ’22 looks better. So it’s a buy,” he said.
The Redbubble share price has, in fact, started FY22 on a more positive note, up 17.45%.
Stott on the other hand flags the company’s expensive price tag and rising expenses.
“79 times PE is too expensive for us. We think there’s better value elsewhere.”
They missed their earnings more recently and the guidance underwhelmed to an extent, being a re-investment year on the cost side of things. So it’s a sell for us,” he said.