Just when you thought the Kogan.com Ltd (ASX: KGN) share price couldn't fall any further, this morning the ecommerce company's shares crashed 20% to a new 52-week low of $4.50.
When the company's shares hit that level, it meant they were down 72% from their 52-week high.
The Kogan share price has recovered a touch this afternoon but remains down 13% to $4.88 at the time of writing.
Why is the Kogan share price crashing again?
Investors have been selling down the Kogan share price today following the release of a disappointing half year result from the online retailer.
For the six months ended 31 December, Kogan reported a 1.3% lift in revenue to $419.5 million. However, this growth was entirely from acquisitions, with its core operations going backwards during the half.
For example, the Kogan.com business reported a 17.3% decline in revenue to $325.7 million following a 11.2% decline in Exclusive Brands revenue and a 33.5% drop in Third-Party Brands revenue.
This was despite Kogan boasting a 10.4% year on year increase in active customers to 3,314,000 (excluding Mighty Ape) and a 176% lift in Kogan First loyalty customers to over 274,000 subscribers.
It was only thanks to the inclusion of the Mighty Ape business, which was acquired in December 2020, that Kogan's overall revenue didn't decline.
How should this be interpreted?
There are a number of possible (negative) ways that investors could interpret this data. This may explain some of the weakness in the Kogan share price today.
Firstly, if customer numbers are rising but revenue is falling, then a company is simply generating less revenue per customer. And given how the Kogan First loyalty program is designed to make customers spend more, it doesn't appear to be having the desired effect despite management's big investment.
Another thing to consider is that Kogan explains that the term active customers "refers to unique customers who have purchased in the last twelve months." This could mean that some of these active customers have been inactive during the first half and are therefore in danger of dropping off in the second half.
Investors may be fearing a scenario that sees Kogan report falling active customers for the first time since listing.
Swinging to a loss
Also putting pressure on the Kogan share price today was its margin weakness.
Due to spending big to grow the aforementioned Kogan First loyalty program and battling high variable costs associated with warehousing/higher inventory levels, Kogan swung from a profit to a loss during the half.
On the bottom line, the company reported a net loss after tax of $11.9 million. This is down $35.5 million from a first half profit of $23.6 million a year earlier.
Investors will no doubt be hoping for better in the second half. But judging by the Kogan share price performance today, not all of them are willing to stick around to find out if that happens.
