It's been a bit of a volatile start to the week's trading for the S&P/ASX 200 Index (ASX: XJO) and many ASX 200 shares so far this Monday. At the time of writing, the ASX 200 has dropped 0.003% after stints in both positive and negative territory this session. But let's talk about what's going on with Kogan.com Ltd (ASX: KGN) shares.
Kogan shares are proving to be a major drag on the markets so far today. The e-commerce stock closed at a flat $4 a share last week. But this morning, those same shares opened at $3.93 before dropping as low as $3.79. That was a 5.25% drop at the time. At present, Kogan has recovered a little and is back up to $3.86 a share. Even so, that still translates into a 3.6% loss for the day so far.
So why are Kogan shares being so severely punished by investors today?
Well, it appears the culprit is an ASX announcement Kogan made to the markets just before open this morning.
Kogan drops on Mighty Ape impairment
This announcement revealed that Kogan's board has decided to write down the value of goodwill associated with the 2020 acquisition of the Mighty Ape brand in New Zealand.
The write-down will come in the form of a one-off, non-cash impairment that will not impact the company's adjusted earnings before interest, tax, depreciation and amortisation (EBITDA). The final writedown amount was not released today. Kogan informed investors that it will be included in the company's upcoming earnings report. That's scheduled for release on 25 August next week.
As of 30 June 2024, the value of Might Ape's goodwill was estimated at $46.3 million.
Here's how Kogan explained why it has made this write-down decision:
The decision to write down the goodwill reflects a recognition of the poorer-than-expected trading performance and longer than anticipated recovery from the platform technology challenges following the October 2024 website upgrade1. This was compounded by the recent challenging retail environment in New Zealand marked by weak consumer confidence.
While the Company continues to believe that the Mighty Ape business will return to positive trading performance in the second half of FY26, the Board considers the write down of goodwill to be a prudent measure notwithstanding their ongoing confidence in the Mighty Ape business and brand.
It's clear that investors were not impressed with this announcement today, judging by how Kogan shares have reacted so far this session.
Kogan share price snapshot
Today's share price drop would be particularly unwelcome for shareholders, as it is just the latest setback for the company. Kogan has had a horrid year, with its shares down almost 27% year to date.
Over the past 12 months, investors are also nursing a loss of 12.4%. The all-time highs of $25 a share that we saw back in 2020 are also a distant memory at this point.
At the current Kogan share price, this ASX 200 stock is trading on a market capitalisation of $385.85 million. That's with a trailing dividend yield of 3.71%.
