Kogan Share Price Up on New Acquisition (ASX:KGN)

The Kogan.com Ltd [ASX:KGN] share price is up 3.66% to trade at $16.70 at the time of writing.

Kogan just announced the acquisition of New Zealand online retailer Mighty Ape.

ASX KGN Share Price Chart - Kogan.com

Source: Optuma

Kogan and Mighty Ape

2020 proved to be a record year for Kogan.

The knock-on effect of the COVID-19 pandemic is that many people were forced to stay home in lockdown for long periods of time.

People started shopping to buy goods to make working from home easier and to make their homes more comfortable.

Business conditions for Kogan were so good that in August the company announced:

  • Gross Sales grew more than 117% YoY
  • Gross Profit grew more than 165% YoY
  • Adjusted EBITDA grew by more than 466% YoY

The growth is not only being reflected in the share price but also in the company itself as they make acquisitions.

Kogan announced they have acquired 100% of the online retailer Mighty Ape.

Mighty Ape operates online stores in New Zealand and Australia.

The company is a leading online retailer in New Zealand with more than 690,000 unique customers and more than 895,000 subscribers.

Their core focus is on gaming, toys, and other entertainment categories.

Over 70% of New Zealand orders in the 12 months to October 2020 were placed by repeat customers, showing that Mighty Ape holds strong customer loyalty.

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What does the deal mean for the Kogan share price?

Kogan bought 100% of Mighty Ape Ltd for the purchase price of AU$122.4 million. This will be paid in four tranches.

The acquisition combines two market leaders, which will complement each other well and will enable Mighty Ape to build on its strong customer offering.

Also providing the infrastructure and expertise for Mighty Ape to grow.

Kogan.com COO and CFO David Shafer said:

We are pleased to be bringing the iconic Mighty Ape into the Kogan Group.

We are delighted to be welcoming Simon Barton and his team. We are a natural home for Mighty Ape, given similar histories and shared values.

The acquisition looks to be a win-win for both companies.

Kogan Share Price Chart - ASX KGN

Source: Optuma

The KGN share price fell 34.69% from the all-time high in October to where it sits at the time of writing.

The last few weeks saw a pullback for the Kogan share price and if it continues, then the levels of $14.45 and $11.75 may be enough to halt the fall.

On the upside if the price moves back up, then the levels of $17.10 and $18.10 may provide future resistance.

Kogan proved to be a standout company in terms of growth this year, but for everything that goes up it must come down at some stage, which is what seems to be happening now.

A stock to keep on a watchlist, for sure.


Carl Wittkopp,
For Money Morning

Carl Wittkopp writes for Money Morning and has a diploma in Financial Planning. He specialises in technical analysis.

Money Morning Australia