The market has been merciless in punishing the Redbubble Ltd (ASX: RBL) share price after the company yesterday released a seemingly positive third-quarter update.

Slumping 17% by close of trade yesterday, the Redbubble share price is continuing to slide today and is trading at $4.11 at the time of writing, a further drop of 3%.

Despite a well-rounded update as far as key financial metrics are concerned, the market honed in on its weaker earnings before interest, tax, depreciation, and amortisation (EBITDA) margins and increased marketing spend. 

Redbubble expects its EBITDA margins to decline from 9.5% to mid-single digits in the near term, while headcount and marketing expenses are expected to increase to drive customer acquisition. 

The company was rapidly honing in on profitability, with an FY20 net loss of $8.8 million and 1H21 profit of $41 million. However, lower margins and increased expenses could temper its profit expectations. 

Morgans weighs in on the Redbubble share price 

Morgans explains that there’s currently a cycle of tough comparisons to periods with COVID-19 tailwinds and “unlikely-to-be-repeated” supercharged sales. 

US streaming giant Netflix Inc (NASDAQ: NFLX) is a prime example of what’s happening. The US$225 billion giant tanked 7% on Tuesday after reporting only 4 million new subscribers had joined the platform compared to its expected 6 million. 

In light of the current cycle, Morgans has downgraded Redbubble shares from add to hold with a target price cut from $6.64 to $4.88. 

Despite the downgrade, Morgans believes its business model and long-term growth profile is still appealing. It commented that its investment into marketing plays into the large opportunity to increase customer loyalty and repeat purchase metrics. 

Redbubble’s update also cited aspirational goals by 2024, including more than doubling marketplace revenue and improving EBITDA margins to 10-15%. The targets imply a 20-30% compound annual growth rate (CAGR) for revenue, which was well above the broker’s estimates. 

Foolish takeaway

Increasing marketing investment and expenses at the cost of near-term earnings could be a necessary evil to drive long-term shareholder value. 

While the Redbubble share price is trying to find a bottom after yesterday’s steep 20% fall, Morgans remains positive on the company’s long term prospects. 

More reading

• The Youfoodz (ASX:YFZ) share price is down 15% today. Here’s why
• Why some of your favourite ASX growth shares are free-falling this week
• ASX 200 recovers, Redbubble sinks, Megaport jumps
• 2 exciting e-commerce ASX shares growing rapidly
• Redbubble (ASX:RBL) share price crashes 20% on increased investments

Kerry Sun has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Netflix. The Motley Fool Australia has recommended Netflix. 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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One investment option that is growing in popularity each month is exchange traded funds (ETFs). 

And it certainly isn’t hard to see why ETFs are so popular with investors.

Not only are they an easy way to invest your hard earned money, they provide you with options that were unthinkable a decade ago. If you can imagine it, there’s probably an ETF for it out there.

But given the many options, it can be difficult to decide which ones to buy above others.

To narrow things down, I have picked out two ETFs that are highly rated right now. Here’s what you need to know about them:

BetaShares Global Cybersecurity ETF (ASX: HACK)

With the world rapidly shifting online for everything from tax returns to banking, cyber security has become incredibly important.

In light of this, demand for cyber security services continues to increase and shows no sign of slowing.

The BetaShares Global Cybersecurity ETF could be a great way to gain exposure to this trend. It provides investors with exposure to the leading companies in the global cybersecurity sector.

This means you’ll be buying a slice of companies such as Accenture, Cisco, Cloudflare, Crowdstrike, and Okta.

VanEck Vectors Video Gaming and eSports ETF (ASX: ESPO)

Another technological trend that investors may want to gain exposure to is video gaming.

Investors can achieve this through the VanEck Vectors Video Gaming and eSports ETF. This ETF gives investors access to a portfolio of the largest companies involved in video game development, hardware, and esports.

Among the companies included in the fund are giants such as Nvidia, Take-Two, and Electronic Arts.

VanEck notes that these companies are in a position to benefit from the increasing popularity of video games and eSports. Furthermore, the fund manager points out that the fund gives investors the opportunity to diversify their portfolio by providing tech options outside FAANG stocks.

More reading

• Got money to invest? Here are 2 ASX shares to buy
• 2 outstanding tech ETFs for ASX investors to buy this month
• How this ASX ETF is battling the biggest threat to Australian business growth
• These ETFs have been making ASX investors rich
• 2 quality tech ETFs delivering strong returns

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of BETA CYBER ETF UNITS. The Motley Fool Australia has recommended VanEck Vectors ETF Trust – VanEck Vectors Video Gaming and eSports ETF. 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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The De Grey Mining Limited (ASX: DEG) share price has been a very strong performer on Friday.

In afternoon trade the gold exploration company’s shares are up 16% to $1.55.

This leaves the De Grey Mining share price trading within touching distance of its record high of $1.60.

Why is the De Grey Mining share price rocketing higher?

Investors have been fighting to get hold of the company’s shares today following the release of drilling results from its very promising Hemi prospect in Western Australia.

According to the release, strong mineralisation has been intersected at its Aquila and Crow sites.

At Aquila the company reported impressive resource definition and extensional drilling, with significant new intercepts. Whereas at Crow, visible gold was intersected again in the McLeod lode.

Management commentary

De Grey’s General Manager of Exploration, Phil Tornatora, commented: “Aquila-Crow is one of the more structurally complex areas at Hemi and has significant gold endowment. The McCleod Lode at Crow has now produced a number of thick, very high grade intersections which add significantly to the resource potential.”

“Improved targeting of these high-grade zones is ongoing as we gain a better understanding of the geological controls. Aquila continues to produce consistent, wide gold intersections throughout the lode, particularly in shallower portions,” he added.

This latest drilling update reinforces the view that De Grey Mining is sitting atop a significant gold deposit.

Unsurprisingly, this has been reflected in the De Grey Mining share price. Today’s gain means it is now up a massive 318% since this time last year.

And if you stretch back a tiny bit further to the start of 2020, the return stretches to over 3,000%.

This has taken the company’s market capitalisation to approximately $2 billion, which demonstrates just how excited investors are about the Hemi prospect.

More reading

• Why Accent, AMP, De Grey, & Nuix shares are charging higher
• Why the De Grey Mining (ASX:DEG) share price is dropping today
• Why the De Grey Mining (ASX:DEG) share price is on watch today
• De Grey (ASX:DEG) share price falters despite new gold discovery

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. 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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The Lion Energy Ltd. (ASX: LIO) share price is one of the best performers on the ASX today, outpacing almost all shares. This comes after the company announced a capital raising to complete operations and pursue its green hydrogen strategy.

At the time of writing, the energy producer’s shares are fetching 6.3 cents apiece, up an incredible 65.79%.

Lion’s capital raising efforts

Investors are driving up the Lion shares as the company provided some positive developments in morning trade.

According to the release, Lion advised it is undertaking a capital raise to fund its operations and green hydrogen strategy.

So far, the company has received $0.93 million from professional and sophisticated investors. However, Lion is seeking shareholder approval for 2 other tranches, to receive a total of $2.8 million in the placement.

The first tranche consists of 31.1 million new shares, utilising the company’s 15% placement capacity under listing rule 7.1. This allows up to 15% of its shares to be issued without shareholder approval.

The 1:1 attached options to the placement are subject to shareholder approval at the annual general meeting scheduled in July.

The second tranche has been committed through convertible notes for the amount of $1.51 million from new and existing investors. The unsecured notes have a maturity date of 31 December 2021. Each share issued from the convertible notes will include a 1:1 option and earn an interest of 12% per annum. The entire second tranche is subject to shareholder approval.

The third and final tranche will be issued to the company directors for the value of up to $350,000. Again, this is subject to shareholder approval.

All three tranches are issued at a price of 3 cents per share and fall under the same terms set out by the company. The options contain a strike price of 4 cents per share, with a 2-year expiry from the date of issue.

Furthermore, the board revealed that it plans to issue a total of 18,050,000 performance rights to the directors and officers. This is part of the remuneration package, and each performance right can be converted to one ordinary share. A shareholder will have the right to vote for or against this proposal at the general meeting.

Management commentary

Lion executive chair, Tom Soulsby welcomed the partnership, saying:

We are pleased to work with the team at Peak to support Lion’s legacy business and related new hydrogen studies and our potential foray into the Australian clean energy space. Peak brings a wealth of experience in supporting companies with green hydrogen and renewable investment businesses in Australia.

The proceeds of the placement will be used towards advancing the onshore seismic operations in the East Seram PSC. In addition, remaining funds will be allocated to studying hydrogen production on Seram Island, working capital, and exploring business opportunities in green hydrogen.

Lion share price snapshot

In the past 12 months, the Lion share price has jumped more than 270% and is up over 150% year-to-date. The company’s shares reached a 52-week high of 9.2 cents just last week.

On valuation metrics, Lion presides a market capitalisation of roughly $13.2 million, with 207 million shares outstanding.

More reading

• Here’s why Lion Energy (ASX:LIO) shares rocketed 132% this morning

Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. 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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Neometals Ltd (ASX: NMT) shares are edging lower today after the company announced it plans to list on the London Stock Exchange (LSE). At the time of writing, the Neometals share price is trading at 49.5 cents – down 1.0%. By comparison, the All Ordinaries Index (ASX: XAO) is down by just 0.1%.

Let’s take a closer look at today’s news from the lithium exploration company.

What’s affecting the Neometals share price?

The Neometals share price is in the red today after the company advised in a statement to the ASX it is seeking to list on the LSE in addition to the ASX. The dual listing is being sought  “as part of its strategy to capitalise on substantial UK and European investor interest in the Company’s role supporting sustainable circular battery value chains.”

The company says it expects to be admitted onto the LSE in the first half of FY22. 

Neometals managing director, Chris Reed, commented:

Neometals’ projects are advancing towards development decisions, so the time is right to maximise liquidity and better access the huge pools of European investment capital. Admission to the LSE extends the trading window available to investors and we look forward to leveraging off Cenkos’ strong track record in supporting ESG-focused companies. We also look forward to participating in LSE sustainability initiatives like the ‘Green Economy Mark’, which recognises companies deriving 50% or more of their revenues from environmental solutions.

Neometals would not be the first Aussie company or even the first minerals exploration company to be dual listed. Rio Tinto Limited (ASX: RIO) is also dual-listed on the ASX and LSE. Lithium competitor Piedmont Lithium Ltd (ASX: PLL) is dual-listed on the Nasdaq, as is Mesoblast Limited (ASX: MSB).

Only recently, Afterpay Ltd (ASX: APT) said it was considering a dual listing in the United States. Meanwhile, Zip Co Ltd (ASX: Z1P) shares surged by around 20% in early February amid rumours it was exploring a potential listing in the US. Judging by today’s Neometals share price action, however, investors do not hold the same enthusiasm over a possible dual listing for the lithium explorer. 

Company background

While initially focused on lithium, Neometals has expanded its remit over recent years. The company says it has three main focus areas:

1. Recycling and resource recovery – The company extracts lithium and vanadium through recycling programs. Lithium is recovered from ion batteries while vanadium is salvaged from steel manufacturing by-products.
2. Lithium refinery project – With a plant in India, Neometals wants to refine its lithium to supply “the battery cathode industry”.
3. Barrambie titanium and vanadium project – According to the company, this project encompasses one of the largest titanium-vanadium deposits in the world. Neometals expects to develop the site from 2022.

Neometals share price snapshot

Over the past 12 months, the Neometals share price has increased by around 209% Only last week, the company hit a 52-week high of 54 cents per share.

Neometals has a market capitalisation of $264.5 million.

More reading

• What’s happening with the Neometals (ASX:NMT) share price?
• Why the Neometals (ASX:NMT) share price has surged to a 52-week high
• Why the Neometals (ASX:NMT) share price is shooting 8% higher
• ASX lithium shares are surging across the board. Here’s why

Marc Sidarous has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of ZIPCOLTD FPO. The Motley Fool Australia owns shares of AFTERPAY T FPO. 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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The National Australia Bank Ltd (ASX: NAB) share price has been a strong performer in recent times. The banking giant is on the mends as the Australian economy gets back on track from the impacts of COVID-19.

At the time of writing, the financial services company’s shares are swapping hands for $26.45, up 0.23% for the day so far.

On the road to recovery

Investors appear pleased with NAB’s handling of the sudden and sharp shockwave of the pandemic.

In the company’s most recent quarterly update (Q1), NAB advised its financial position remains strong. The bank noted that economic trends were improving, with it recording earnings of $1.65 billion. This was 47% higher than the FY20 second-half quarterly average, primarily driven by low credit impairment charges.

In addition, NAB stated that its underlying performance was sound in the current competitive, low-interest-rate environment. The business saw reductions in the deferral of repayments as business conditions improved. Cash earnings growth lifted by 1% when compared against the prior corresponding period.

With this positive news, NAB shares have come a long way from their COVID-19 lows of around $15 seen on 23 March 2020.

NAB is scheduled to report its FY21 half-year results to the ASX on 6 May.

Broker update

After reporting its quarterly results, a number of brokers rated the company with similar price points. Swiss investment firm UBS raised its price target for NAB by 8% to $27.00. Morgan Stanley followed suit to also increase its rating by 3.3% to $25.30. The most recent broker note, however, came from Macquarie late last month, which has initiated a price of $26.75 for the company.

NAB share price summary

The NAB share price has accelerated over the past year — up by almost 70% — particularly since the start of November. The rise in the company’s shares arguably reflects Australia’s success in managing the economic impacts of the pandemic.

On valuation grounds, NAB commands a market capitalisation of around $87.2 billion, with almost 3.3 billion shares on issue.

More reading

• NAB report finds the Australian economy on track to reach pre-COVID level
• Westpac, ANZ, CBA share prices dip after class action for ‘junk’ insurance
• ANZ Bank’s (ASX:ANZ) profit result could get an extra boost: Macquarie
• NAB (ASX:NAB) chair signals ‘rational’ responses to curb booming housing market
• The Westpac (ASX:WBC) share price is the best performing of the big four banks in 2021

Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Macquarie Group Limited. 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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The S&P/ASX 200 Index (ASX: XJO) is on course to end the week with a small daily decline. In afternoon trade, the benchmark index is down 0.2% to 7,046.2 points.

Four ASX shares that are falling more than most today are listed below. Here’s why they are sinking lower:

A2 Milk Company Ltd (ASX: A2M)

The A2 Milk share price has fallen 3.5% to $7.37. This infant formula company’s shares have come under pressure this week after being downgraded by analysts at Morgans. The broker has suggested that an inventory build up and discounting could lead to a2 Milk falling short of its downgraded guidance in FY 2021.

Centaurus Metals Limited (ASX: CTM)

The Centaurus Metals share price is down 3.5% to 67.5 cents. This is despite the company announcing that it has secured possession of a further key piece of land that covers its 100%‐owned Jaguar Nickel Sulphide Project in northern Brazil. According to the release, the latest agreement covers an area of approximately 480 hectares and provides further security of land possession for the long‐term benefit of the Project. Weakness in the nickel price overnight could be weighing on its shares.

Kogan.com Ltd (ASX: KGN)

The Kogan share price has crashed 14% to $10.70. Investors have been selling the ecommerce company’s shares following the release of a disappointing third quarter update. While Kogan’s top line growth was strong, a jump in operating costs led to its operating earnings declining 24% compared to the prior corresponding period.

Youfoodz Holdings Ltd (ASX: YFZ)

The Youfoodz share price has sunk 14% to 60.5 cents. This morning the ready-made meals company released its third quarter update and revealed a 23.6% increase in prepared meals to a total of 4.9 million. This underpinned an 18.2% increase in gross revenues to $35.3 million. However, due to weak demand in the B2B market, Youfoodz advised that it would fall short of its revenue and EBITDA guidance.

More reading

• The Youfoodz (ASX:YFZ) share price is down 15% today. Here’s why
• Kogan (ASX:KGN) share price crashes 13% on Q3 update
• ASX 200 down 0.1%: Kogan crashes, AMP’s demerger plans, Telstra strengthens 5G network
• Brokers name 3 ASX shares to buy now
• Why has the Kogan (ASX:KGN) share price plummeted 10%?

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended A2 Milk 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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The Youfoodz Holdings Ltd (ASX: YFZ) share price is one of the worst-performing initial public offerings of 2020. Its shares have struggled to gain traction, falling from a listing price of $1.50 to a close of 70.5 cents on Thursday. 

The company announced its third-quarter update with FY21 guidance today. At the time of writing, the Youfoodz share price has plummeted 14.8% and is now trading at 60 cents.

What’s driving the Youfoodz share price down? 

During the third quarter, Youfoodz prepared a total of 4.9 million meals, representing a 23.6% increase on the prior corresponding period (pcp). This translated to an 18.2% increase in gross revenues to $35.3 million. 

The company believes the results demonstrate the continued momentum in the business compared to the pcp, which captured a strong uplift in customers and revenues due to initial COVID-19 lockdowns across Australia. 

Revenue breakdown

The Youfoodz business generates revenue from two key segments, B2C (home delivery) and B2B (wholesale).

The update highlighted a 41.2% improvement in B2C revenues to $34.6 million. This was driven by a range of marketing initiatives resulting in rapid customer acquisition and active customer growth. The B2C segment has seen customer order frequency over the quarter remain relatively consistent at approximately 2.6 for the quarter and a 10.4% increase in average order value to $96.8 per order. 

The company launched its partnership with Velocity during the quarter, providing access to its ~10 million program members. While early in the relationship, the company has been pleased with the customer take-up to date. 

B2B revenues during the quarter decreased 3.8% to $15.6 million. The company blamed uncertainty associated with localised lock-downs resulting in minimal stocking levels from customers. Sales to gym and corporate customers were also negligible.

Looking ahead

As the pandemic restrictions have been lifted, the company sees some early indications that customers are beginning to increase orders in the fourth quarter. However, it notes uncertainty as to when gym and corporate customers will recommence ordering. 

Youfoodz intends to strengthen its wholesale relationships and explore range expansion opportunities with existing customers. This is evident in supermarkets with a successful meal range extension with one large national supermarket customer and an agreement to launch its beverage range into another national customer in 4Q FY21. 

Overall, the company expects FY21 gross revenue to be within the range of $201 million to $205 million (vs. prospectus forecast of $199.8 million). 

However, given the underperformance of B2B and greater marketing and customer acquisition incentives, the company expects FY21 net revenue to be in the range of $146 million to $148 million (vs. prospectus forecast of $149.9 million). 

Why the Youfoodz share price is weaker on Friday

Redbubble Ltd (ASX: RBL) and Kogan.com Ltd (ASX: KGN) have delivered similar quarterly updates as Youfoodz – largely positive performances with slight negatives around areas such as margins, marketing investment and inventory. 

Today’s major fall in the Youfoodz share price could reflect a market unimpressed with the company’s underperforming B2B segment and missing prospectus revenue forecasts.

More reading

• Kogan (ASX:KGN) share price crashes 13% on Q3 update
• ASX 200 down 0.1%: Kogan crashes, AMP’s demerger plans, Telstra strengthens 5G network
• Why some of your favourite ASX growth shares are free-falling this week
• Why has the Kogan (ASX:KGN) share price plummeted 10%?
• ASX 200 recovers, Redbubble sinks, Megaport jumps

Motley Fool contributor Kerry Sun has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended 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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When one thinks of what the most traded share on the S&P/ASX 200 Index (ASX: XJO) might be, AMP Ltd (ASX: AMP) is not one that would normally spring to the front of one’s mind.

What about the uber-popular ASX growth shares like Afterpay Ltd (ASX: APT)? Or the biggest ASX blue chips like Commonwealth Bank of Australia (ASX: CBA), CSL Limited (ASX: CSL) or BHP Group Ltd (ASX: BHP).

‘The AMP’ might have been an ASX blue chip heavyweight once. But with its current market capitalisation of just $3.89 billion, it is now dwarfed by companies like CBA ($158 billion). Heck, even Zip Co Ltd (ASX: Z1P) is now bigger than AMP.

And yet, AMP Ltd is today the most traded ASX 200 share on the market.

The AMP share price’s 1.07% move higher today certainly doesn’t look too extraordinary. However, AMP shares were up more than 4% at one point this morning. ASX data shows that roughly 24.7 million AMP shares have changed hands today at the time of writing. That’s way above the next most-traded ASX share in Pilbara Minerals Ltd (ASX: PLS), which has close to 14 million shares swapping hands.

So why is AMP such a popular trade today?

Massive interest in the AMP share price

Well, to start with, AMP had a shocker yesterday, falling by more than 3%. The catalyst for that drop was its quarterly report for the 3 months ending 31 March. The wealth manager told investors that it had lost $1.5 billion in net cash outflows over the month, which was only just offset by a $1.6 billion rise in total funds under management. But his rise was only due to higher investment markets.

But today, we had some new news out of AMP. Which is undoubtedly fuelling the heavy trading we are seeing today.

As my Fool colleague James covered earlier today, AMP has announced a planned demerger. This demerger will result in the spinoff of AMP Capital’s Private Markets business. Private Markets will house some of the business assets of AMP Capital. According to the company’s announcement, it will be a “ leading global private markets investment manager with a strong performance track record in differentiated asset classes of infrastructure equity, infrastructure debt and real estate, and capabilities to expand into attractive growth adjacencies“.

Meanwhile, the ‘new slimmed-down AMP’ will be a retail-focused wealth manager as well as offering investment and banking services. It will also hold a 20% interest in Private Markets, as well as AMP Capital’s Global Equity and Fixed Income business (which might be sold off as well), and AMP Capital’s Multi-Asset Group.

Judging by the AMP share price today, as well as the huge number of shares traded, investors are taking a keen interest in what this beleaguered ASX share has pulled out of its hat.

More reading

• Why Accent, AMP, De Grey, & Nuix shares are charging higher
• What’s happening with the ANZ Bank (ASX:ANZ) share price?
• ASX 200 down 0.1%: Kogan crashes, AMP’s demerger plans, Telstra strengthens 5G network
• What Biden’s capital gains tax changes could mean for the ASX 200
• AMP (ASX:AMP) share price charges higher on demerger plans

Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of CSL Ltd. and ZIPCOLTD FPO. The Motley Fool Australia owns shares of AFTERPAY T FPO. 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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The Kogan.com Ltd (ASX: KGN) share price is well and truly out of form on Friday.

In afternoon trade, the ecommerce company’s shares are down 13% to $10.80.

This means the Kogan share price is now down 58% from its 52-week high.

Why is the Kogan share price crashing lower?

Investors have been heading to the exits in their droves today after Kogan became the latest ecommerce company to release a disappointing third quarter update.

This follows similarly poorly received releases by Redbubble Ltd (ASX: RBL) and Temple & Webster Group Ltd (ASX: TPW) earlier this week.

What did Kogan report?

For the third quarter of FY 2021, Kogan reported gross sales growth of ~47% and revenue growth of ~65% across its businesses.

This was driven by a 77% increase in active customers over the prior corresponding period to 3,215,000 for Kogan.com and 742,000 for Mighty Ape.

This compares to active customers of 3,003,000 for Kogan.com and 719,000 for Mighty Ape at the end of December.

Earnings decline

While the above looks very positive, it went downhill quickly from there. Which is why the Kogan share price is crashing lower today.

Although its gross profit rose over 54%, its adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) fell more than 24% compared to the prior corresponding period.

This decline was driven by its core Kogan.com business, which reported a significant increase in operating costs. This led to this side of the business posting an adjusted EBITDA decline of more than 42% for the period.

What’s causing this?

Kogan explained that during the quarter customer demand fluctuated below the levels seen in the prior nine months. As a result, the company was required to store larger than expected levels of inventory.

This led to Kogan incurring high storage expenses and demurrage fees.

The company has been progressively working towards optimising the inventory position to reflect current market conditions. However, this is being done by increasing its promotional activity, which could weigh on margins in the near term.

Also weighing on its performance is price inflation. This is being seen for many products currently being planned for reorder in advance of the peak Christmas trading period.

Is the Kogan share price in the buy zone?

Brokers have yet to react to this update, so it is difficult to say whether the Kogan share price is now in the buy zone.

But prior to today, Credit Suisse had an outperform rating and $20.85 price target and UBS had a neutral rating and $15.10 price target.

Both price targets are significantly higher than the current Kogan share price of $10.80.

More reading

• ASX 200 down 0.1%: Kogan crashes, AMP’s demerger plans, Telstra strengthens 5G network
• Why some of your favourite ASX growth shares are free-falling this week
• Why has the Kogan (ASX:KGN) share price plummeted 10%?
• ASX 200 recovers, Redbubble sinks, Megaport jumps
• 2 exciting e-commerce ASX shares growing rapidly

James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Temple & Webster Group Ltd. The Motley Fool Australia owns shares of and has recommended Kogan.com ltd. The Motley Fool Australia has recommended Temple & Webster Group 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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