Why has Kogan’s Share Price Plummeted almost 13%?

Kogan Ltd’s [ASX: KGN] share price tumbled nearly 13% yesterday, based on reports that founders of the online retailer were secretively looking to sell portion of their shares.

At the time of writing, the company’s shares are trading at $8.58, down from Monday’s close price of $9.80.

Why has Kogan’s Share Price Dropped?

On Monday, when Kogan announced their expansion into the Australian whitegoods and built-in kitchen appliance market with its own brand, their shares subsequently rose 7.45%.

Following the news, it surfaced that founders Ruslan Kogan and David Shafer were looking to sell as much as $100 million worth of stock, as reported by The Sydney Morning Herald.

While there is nothing wrong with a company founder deciding to cash in on their investment, this is the fourth time in less than a year that Kogan and Shafer have tried to offload stock, as reported by The Sydney Morning Herald.

Investors are being sold on the ‘blue sky ahead’, but the founders are secretly unloading stock behind the scenes.

The Sydney Morning Herald reported that this isn’t the first time Kogan and Shafer have used this manoeuvre. In October last year Kogan announced a huge Christmas Sale, then — just a day later — the pair sold $22 million worth of shares.

Kogan made an announcement yesterday in response to the media speculation, stating that Kogan and Shafer did not receive an acceptable bid, confirming that ‘Mr Kogan and Mr. Shafer are not currently in discussions to sell any shares.

What can we expect to see from Kogan?

Despite the recent fall, Kogan’s share price is still valued 466% higher than when it first listed on the ASX in 2016, at $1.51.

The online retailer has continued to grow along with its share price, recently introducing pet insurance, NBN Internet and now whitegoods and built-in kitchen appliances to their product list.

The founders are going to have a bit of damage control to attend to in order to regain their credibility and investors trust, but we will have to wait and see how this plays out for them.


Dannielle Rawlings,
For Money Morning

PS: It’s no secret that Kogan.com has had incredible growth over the past two years, and despite this fall back still has the 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’.

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