Online retailer Kogan.com Ltd (ASX: KGN) has been among the best ASX shares to own over the last 12 months, with its share price soaring almost 160% higher. Valued at just $7.34 a year ago, the Kogan share price has skyrocketed to $19 as at the time of writing, and even briefly touched an all-time high price of $25.57 back in mid-October.
What’s been driving the Kogan share price?
Arguably Australia’s answer to United States internet giant Amazon.com, Inc. (NASDAQ: AMZN), Kogan saw its revenues soar in 2020. This occurred as lockdown measures imposed by governments to curb the spread of coronavirus encouraged more consumers to shop online from home.
As far back as April, around the time COVID-19 panic-selling was wreaking havoc on global markets, Kogan was already reassuring shareholders that it was seeing no ill-effects from the virus. In fact, most of the impact on Kogan’s business stemming from lockdowns had been positive, helping to propel the Kogan share price higher.
In a market update issued at the time, Kogan revealed that March had been a record month for the company, with the largest monthly increase in active customer numbers since the company listed on the ASX. March gross sales, which included sales made by third parties through Kogan’s online marketplace, and gross profit both increased by a whopping 50% year on year.
This positive momentum continued throughout the second half of the financial year. Kogan’s total revenues surged over 13% year on year to $497.9 million, while net profit after tax jumped almost 56% to $26.8 million.
The company capitalised on this strong business momentum so shore up its balance sheet through a series of capital raises. $100 million was raised via institutional investors, while a further $20 million came from retail investors.
More recent news
Kogan’s strong FY20 performance has carried over into FY21. At the company’s annual general meeting (AGM) held in November, Kogan CEO and founder Ruslan Kogan touched on a few aspects of the company’s year-to-date FY21 performance. As of October 2020, year-to-date gross sales were up almost 100% year on year, while gross profit had skyrocketed 132%.
Kogan was also ramping up its marketing spend in anticipation of the Christmas retail trading period. This included a series of record-breaking monthly marketing investments already made in FY21.
At the AGM, company chair Greg Ridder had flagged the potential for increased M&A activity. Then, in early December, Kogan announced it had acquired leading New Zealand online gaming and entertainment retailer Mighty Ape for $122.4 million. Kogan expected the acquisition to deliver significant revenue and cost synergies, as well as add immediate scale to Kogan’s New Zealand operations. The Kogan share price rallied almost 8% on the day the acquisition was announced.
Mighty Ape expected revenues for the 12 months ended 31 March 2021 to be $137.7 million, while gross profit was anticipated to be approximately $45.7 million. This is a significant addition to Kogan’s revenue pool and is before consideration of potential cross-selling opportunities and other synergies.
Foolish takeaway
Whilst the Kogan share price delivered a spectacular performance in 2020, it is still currently trading more than 25% below its all time high. With the economy continuing to open up, it will be interesting to see what 2021 has in store for Kogan shares.
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Returns as of 6th October 2020
More reading
- These ASX shares are growing rapidly in FY 2021
- The 5 best performing ASX 200 shares of 2020
- 2020 ASX recap of the year we’ll never forget
- 3 ASX shares to buy for 2021
- Here’s how the S&P/ASX All Technology Index fared in 2020
John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Rhys Brock owns shares of Kogan.com ltd. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Amazon. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Kogan.com ltd and recommends the following options: long January 2022 $1920 calls on Amazon and short January 2022 $1940 calls on Amazon. The Motley Fool Australia has recommended Amazon and Kogan.com 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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