Here’s why the Kogan (ASX:KGN) share price just sank 15%

Kogan shareholders can’t seem to catch a break…

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Key points

  • The Kogan share price fell 15% at market open today to a new 52-week low
  • The drop follows its latest business update
  • The Kogan share price hit its last 52-week-low on Tuesday

The Ltd (ASX: KGN) share price is sinking lower again this morning, hitting a new 52-week-low just a day after its last.

At market open, the Kogan share price was down 15%, at $5.96. It has since staged a slight recovery and at the time of writing is down 11.84% at $6.18.

Today’s drop coincides with the release of the online retailer’s latest business report, which revealed its first-half results.

So, what did Kogan release?

Kogan share price slumps on update

The Kogan share price is falling after the company reported its results for the first half of the 2022 financial year. The key points included:

Looking closer at its retailing operations, the company reported:

  • More than 4 million active customers reached (more than 10% YoY growth)
  • “Kogan First” loyalty members grew by 176% (at 31 December 2021) and by almost 40% in the period since 30 September 2021
  • A reduction in inventories — $227.9 million (as at 30 June 2021), down to $196.8 million (as at 31 December 2021), comprising of both warehouse and stock in transit.

What happened in the first half?

In dissecting its gross sales performance, Kogan believes the boost can be attributed to the “continuously accelerating Kogan Marketplace” — a platform partnering and exposing select brands and distributors to Kogan customers.

Additionally, it believes its loyalty program “Kogan First” was also a key driver, as well as Kogan Energy (power and gas partnership with part of the Meridian Energy Ltd (ASX: MEZ) group) and Kogan Mobile New Zealand (telecommunications partnership with Vodafone New Zealand).

The company cited its gross profit decline to coronavirus-related disruptions to its supply chain. However, the company still believes it experienced growth on 1H FY20, with a compound annual growth rate (CAGR) of more than 50%.

The company was proud of its net cash position as of 31 December, as this was reported after funding the $29.9 million “Tranche 2” payment of its acquisition of Mighty Ape (initially announced back in December 2020).

Mighty Ape is one of New Zealand’s biggest online gaming and entertainment retailers and had 757,000 active customers as of 31 December.

Since 31 December, the Kogan share price has declined by 30%.

Comment from management

Kogan CEO and founder Ruslan Kogan said:

Over four million Aussie and Kiwi shoppers have recently experienced the choice, value and delivery benefits of the Group…

We have continued to re-invest in our customers through the Kogan First loyalty program to offer the best deals on a wide range of products, delivered quickly and efficiently.

After launching late last year, Kogan Delivery Services is already making an impact with more than 100,000 orders delivered directly to customers since launch.

As always, we’re obsessed with the long term, and our ever-improving customer experience continues to underpin business success.

Kogan share price snapshot

The Kogan share price hasn’t had a great run recently. The company hit a 52-week-low of $7.16 just last week, but that was surpassed on Tuesday by a closing price of just $7.01. Today, Kogan broke its record yet again.

On Monday, Kogan was reported as one of ASIC’S most shorted ASX shares, with its short interest increasing to 12.2%.

This represents a 20% drop in the last month, and an overall 66% drop in the past 12 months.

The company has a market capitalisation of $749.29 million and a price-to-earnings ratio (P/E) of 217.39.

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

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Motley Fool contributor Alice de Bruin has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns and has recommended ltd. The Motley Fool Australia owns and has recommended ltd. 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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