A number of ASX growth shares have been hit hard during 2022. But, could some of these names actually be opportunities at the current, beaten-down prices?
Not every business is worth buying just because it has fallen heavily. However, if there are expectations of growth over the long term, then some names could be solid ideas.
E-commerce saw a big boost during the worst of the COVID-19 period. But now, after heavy falls, could they be attractive ideas because of how much profit and growth they could achieve?
Let's look at two ASX shares that could be interesting ideas.
Kogan.com Ltd (ASX: KGN)
Kogan is an e-commerce business offering a wide range of products and services. Not only does it sell things like televisions, phones, computers and toys, it also offers products like phone plans, insurance and credit cards.
The Kogan share price has dropped around 50% since the beginning of the year, despite its recent boost.
The company recently gave a business update regarding FY22, reporting growth in gross sales by 0.1%. Kogan generated a positive quarterly adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) in the fourth quarter of FY22 after a "successful ongoing recalibration of operating costs".
The ASX share is certainly not generating the same sort of profit or margins that it did a couple of years ago. But, the worst could be behind the company, having suffered from lower demand and excess inventory.
The founder of Kogan, Ruslan Kogan, said:
Times are changing. In uncertain times, people don't want to alter their lifestyle but they are happy to shift the way they shop. We know that in an environment where great value becomes even more important, Kogan.com serves an important need.
However, broker Credit Suisse isn't yet convinced. It has an underperform rating on the business, with a price target of just $3.44 because of numerous headwinds.
Redbubble Ltd (ASX: RBL)
Redbubble is another e-commerce ASX share. It sells items such as apparel, stationery, housewares, bags, and so on, featuring artist-created designs.
The Redbubble share price is another that has suffered heavily this year, down more than 60% in 2022.
The most recent trading update came from the company in April regarding the FY22 third quarter performance.
Redbubble said that the underlying marketplace revenue was down 7% to $96 million, while it made an operating EBITDA loss of $6 million. Nonetheless, the ASX share boasted that it is seeing strong overall customer retention.
At the time of that update management said, "the board does not believe that the current share price reflects the fundamentals and prospects of the business".
The ASX share has a medium-term goal to grow its marketplace revenue to $1.25 billion per annum. The EBITDA margin is expected to "expand significantly over the medium-term" with that revenue growth.
Meanwhile, broker Morgan Stanley has become more cautious on names like Redbubble, with the economic environment expected to hurt demand and growth. Though it does see potential for Redbubble over time.
Morgan Stanley has an equal-weight rating on the business, with a price target of $1. So, it thinks the Redbubble share price could drift lower over the next year.
