Kogan Share Price Plummeting Fast, Down by 10% This Morning

Shares of Kogan.com Ltd [ASX:KGN] have seen a dramatic fall in early morning trading, down in value by almost 10%. This afternoon has seen a bounce-back, but shares are still down by 6.37% at time of writing.

Earlier this month, the e-commerce giant signed supply and logistics agreements, which would enable the selling of whitegoods and built-in kitchen appliances — a new opportunity the market found exciting.

So, what’s going on today?

Why Kogan’s share price is down

Earlier this week, reports circulated that Canaccord Genuity, Macquarie Group Ltd [ASX:MQG] and UBS were looking to sell over 26% of the company’s shares on behalf of founder and CEO Ruslan Kogan alone. But at that point it was just hearsay.

This morning the company has officially announced the sale of shares by Mr Kogan and Chief Financial Officer David Schafer.

According to the release, the pair have received an unsolicited bid for 6 million shares. They’ve ‘reluctantly accepted the bid due to personal financial commitments.’

It’s concerning when even a company’s top dogs aren’t holding tightly onto their own shares. It doesn’t really say much about the long-term value of said shares. But ‘personal financial commitments’ can be pressing, and the vagueness of the management team’s explanation is difficult to engage with comprehensively.

Can Kogan be trusted?

The company has advised that no further share sales by the two parties will take place prior to September 2018, and that both ‘Mr Kogan and Mr Shafer remain fully committed to the business and continue to have the vast majority of their personal wealth invested in Kogan.com.’

Insider selling isn’t the most comforting of tactics on the ASX, but it doesn’t always necessarily spell out dishonesty and disaster. The directors have clearly indicated they have a significant amount of personal wealth tied up in the company, and it doesn’t seem likely their interests would be at odds with shareholders’.

However, although Kogan.com remains one of Australia’s leading online retailers, the market is clearly ruffled by this latest development. It could pay to stay wary.



Ryan Dinse,

For Markets & Money


Ryan Dinse is an Editor at Money Morning.

He has worked in finance and investing for the past two decades as a financial planner, senior credit analyst, equity trader and fintech entrepreneur.

With an academic background in economics, he believes that the key to making good investments is investing appropriately at each stage of the economic cycle.

Different market conditions provide different opportunities. Ryan combines fundamental, technical and economic analysis with the goal of making sure you are in the right investments at the right time.

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