Kogan.com Shares Disappoint on Debut

By Julian Thumm | 08 Jul 2016

Kogan.com’s shares fell almost 17 percent on the first day of trading yesterday, leading some to wonder if Kogan.com’s listing will be another e-commerce bust.

 Kogan.com began trading on the ASX yesterday, and not everything went to plan. Kogan.com shares were down nearly 17 percent at the close of trading on Thursday.

Shares in the online retailer were issued at $1.80. After less than 90 minutes trading, shares in the online retailer had plunged more than 30 cents to just below $1.50. They rebounded somewhat to around $1.60 before closing trading back down at $1.50, 16.7 percent below issue price.

While Kogan.com’s $50 million initial public offering was four times oversubscribed by investors, some analysts have been quick to see the disappointing debut as a worrying sign for the pureplay retailer.

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“It is damaging to the market to see such a well touted stock perform so badly on its first day,” CMC Markets chief market strategist Michael McCarthy told AAP.

Concerns over the Brexit fallout and the lingering political uncertainty in Australia may well have put some doubt in investors’ minds, especially given the poor performance or recently floated e-commerce companies like SurfStitch, Temple & Webster and Redbubble.

Kogan.com Founder and CEO, Ruslan Kogan retain a 50.5 percent stake in the company. The falling share prices wiped $14.2 million from his stake, dragging its value down to $70.6 million.

Kogan, however, stated that he is unconcerned about one day of trading.

“We can’t control what the market does or the external factors but we can control how our business performs and myself and my team are very confident in our forecasts and very confident in how the business is tracking,” Kogan told the Australian Financial Review.

Kogan.com’s net profit is forecast to grow six-fold to reach $2.6 million in 2017, with sales growing 20 percent to $241 million.

Despite the wobbles on debut, Kogan has described the float as a milestone for the company.

“The float was something that needed to be done to release the capital constraints on the business,” he told AAP.

 

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