What experts are saying about the Redbubble (ASX:RBL) share price

The experts’ take on whether Redbubble is a buy, hold or sell.

| More on:
a woman wearing red blows a big bubble with bubblegum from her mouth.

Image source: Getty Images

The Redbubble Ltd (ASX: RBL) share price rebounded strongly off 1-year lows following the company’s FY21 full-year results announcement on 19 August.

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.

Should you invest $1,000 in Redbubble right now?

Before you consider Redbubble, you'll want to hear this.

Motley Fool Investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now... and Redbubble wasn't one of them.

The online investing service he’s run for over a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.* And right now, Scott thinks there are 5 stocks that are better buys.

*Returns as of January 13th 2022

Motley Fool contributor Kerry Sun has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on Broker Notes