Shares in Kogan.com Ltd (ASX: KGN) have had a rough start to November so far. The eCommerce company has been plagued with concerns of ongoing inventory mismanagement since the latter part of 2020. As a consequence, the former darling has become a popular company to short.
The Kogan share price lacked direction in the context of today’s session. After the closing bell, shares were at $9.14, up 0.22%.
A cyclical company currently out of fashion
It doesn’t take a rocket scientist to work out it hasn’t been a good time for Kogan shares over the last 12 months.
A backlog of inventory equating to increased warehousing costs has taken its toll on the company’s earnings for the past three quarters. While the bottom-line dwindled, so too has the Kogan share price, falling 53% since this time a year ago.
Overall, the market seems divided over whether now is a good time to buy Kogan shares. Some analysts and fund managers think yes, others are not so keen.
For instance, Chris Stott from 1851 Capital joined Livewire back in September to share his argument for rating the eCommerce company a sell. At that point in time, Stott highlighted his belief that Kogan was still dealing with inventory issues. In addition, the fundie expected this issue to continue for a while longer.
It seems much of the market would agree to some extent. Kogan shares have featured prominently in the 10 most shorted ASX shares recently. In our latest 10 most shorted ASX shares, the Ruslan Kogan-led business found itself in second place with a short interest of 10.7%.
Despite this negative sentiment, the company posted gross sales and active customer growth in its recent first-quarter update for FY22. In the same update, Kogan revealed it had resolved previous inventory pressures.
However, short levels have remained elevated since this announcement, indicating that perhaps the market had anticipated better results.
Contrarian take on the Kogan share price
The sentiment seems heavily skewed towards the negative end of the spectrum for Kogan, which would make Credit Suisse’s outperform rating quite a contrarian perspective. Analysts at Credit Suisse believe the eCommerce company will continue to benefit from the online shopping shift.
As such, the broker has a $13.88 price target on the Kogan share price. This would suggest a potential upside of 51%.