Why Kogan.com’s Share Price Crashed Yesterday

The Kogan.com Limited [ASX: KGN] share price dropped by almost 18% yesterday. Shares are currently trading at $7.60, down from its record high of $9.24 on Friday.

The online retailer has experienced substantial growth since its listing on the ASX in 2016 — 402% to be precise.

Kogan is a leading consumer brand offering price leadership through digital efficiency. The company is focused on making in-demand products and services more affordable and accessible.

Why has Kogan’s share price dropped?

The share price dropped yesterday after the company released its quarterly results. Despite a strong report, it seems investors weren’t impressed.

Kogan announced that gross revenue for the March quarter increased by 46.1% and gross transaction value by 49.8%.

The company ended the quarter with nearly 1.3 million active customers, up from 1.1 at the end of 2017.

Even though the share price has dropped dramatically, Chief Executive and Founder Ruslan Kogan, told the Financial Review that ‘the business is performing strongly’.

What we can expect to see from Kogan?

Over the past month, Kogan has expanded into offering pet insurance, life insurance and an NBN internet service.

This is in addition to its already extensive range of retail products and services, including health insurance, travel insurance and travel deals.

Mr Kogan told the Financial Review that the new ventures follow the established model. The company partners with an ‘infrastructure provider’, and then sells the services under the Kogan brand to its database of customers.

For our perspective these are beautiful partnerships because they are a win, win, win’, said Mr Kogan. He went on to say that these partnerships allow Kogan to expand into new areas, while the partner acquires new customers at a low cost and consumers get an affordable service.

Some are saying that it is a case of too much too soon. But have we really seen the best of what Kogan.com has to offer already? We will just have to wait and see.


Dannielle Rawlings,
For Money Morning

PS: It’s no secret that Kogan.com has seen huge growth over the past two years, and despite this fall it still shows potential to continue to soar. Our Money Morning Editor, Sam Volkering, argues that the biggest potential gains can be found in the sector with the biggest potential risk — small-cap stocks. If you’re interested in learning more, check out his free report ‘Top Three Aussie Small-cap Stocks to Own in 2018’. You can download this free report here.

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