2022 has not been kind to ASX shares, by any stretch. As it currently stands today, the All Ordinaries (ASX: XAO) remains down by a painful 12.16% year to date. But that's nothing compared to the Kogan.com Ltd (ASX: KGN) share price.
While the All Ords has lost more than 12% this year, Kogan shares have gone from $8.62 at the start of the year to the $3.475 they are presently going for. That's a depressing fall of 59.7%.
Perhaps unfortunately, I happen to own Kogan shares. So why am I still holding what looks like a very sharp falling knife?
Kogan was a company that went from COVID hero to post-COVID (not quite) zero on a dime. Back in October 2020, Kogan was a $25 share. Buoyed by rocketing sales during the lockdowns and faith in Kogan's digital-centric sales models, investors couldn't get enough of this pandemic winner.
But the COVID recovery has been Kogan's bane. The company has admitted it made mistakes ordering far too much inventory for the post-lockdown months.
This helped the company to post its first-ever recorded net loss in terms of earnings before interest, tax, depreciation, and amortisation (EBITDA) for the 2022 financial year.
Why am I still holding Kogan shares today?
So why do I still own Kogan shares? Well, I like this company. Its founder and CEO Ruslan Kogan is a driven and savvy businessman. He has built this company from the ground up into the $375 million company we see today. Like many investors, I like seeing a founder at the helm of a company. I think Mr Kogan has what it takes to lead his company out of the rough spot it is currently in.
Unlike most investors, I did not despair at Kogan's FY22 numbers. Although the headline figures weren't pretty, there were plenty of indicators that the worst is behind the company. For instance, even though revenues fell 8% to $718.5 million in FY22, this still represents a compound annual growth rate (CAGR) of 20.1% since FY20.
We also saw some encouraging customer engagement metrics. In FY22, Kogan reported that its 'Kogan First' membership club had grown by 372,000 subscribers by the end of the financial year, giving it a compounded annual growth rate of 51.6% since FY20.
The recently-acquired Mighty Ape business is also firing on all cylinders, recording 783,000 active customers as of 30 June 2022.
So, yes, Kogan has made some disappointing mistakes in recent years. But I think the company's management has learned from them and is positioning the business for far brighter days ahead.
That's why I continue to hold Kogan shares and am confident in their future. Remember, you can't hope to beat the market unless you are willing to make some contrarian bets.
