The Redbubble (ASX:RBL) share price is up 320% in 2020: Can it go higher?

The Redbubble Ltd (ASX:RBL) share price has been on fire in 2020. Here's why its shares are up 320% and could still go higher…

| More on:
Chalk-drawn rocket shown blasting off into space

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The Redbubble Ltd (ASX: RBL) share price has been a fantastic performer on Monday.

In late afternoon trade the ecommerce company's shares are up 11% to $4.56.

This latest gain means the Redbubble share price is now up a whopping 320% since the start of the year.

Why is the Redbubble share price up 320% in 2020?

Investors have been buying Redbubble shares this year after its sales growth accelerated materially during the second half of FY 2020.

This was of course driven by the shift to online shopping during the pandemic after retail stores were forced to close.

This strong second half led to Redbubble delivering a 43% increase in full year revenue to $368 million and a 141% increase in earnings before interest, tax, depreciation and amortisation (EBITDA) to $15.3 million.

What about the future?

The company's CEO, Martin Hosking, revealed that Redbubble's strong form continued early in FY 2021, with sales more than doubling during the month of July.

Pleasingly, he appears confident that its growth can continue. Mr Hosking explained: "RB Group's on-demand fulfilment model and differentiated consumer offerings provide us with distinctive advantages. The strong financial performance follows from these fundamentals."

"It has been pleasing to see the acceleration of existing trends in the last few months. 2021 represents a year of opportunity for the business. We are positioned to build on a decade of momentum and aggressively pursue the global opportunity presented by the shift to online activity and increasing adoption of ecommerce platforms," he added.

What else has been driving the Redbubble share price higher?

Also supporting the Redbubble share price was a broker note out of Goldman Sachs last month.

Its analysts put a buy rating and $5.20 price target on the company's shares, but suggested they could be worth upwards of $10.75 if it could grow its sales at a similarly strong rate to Temple & Webster Group Ltd (ASX: TPW).

Goldman Sachs explained: "TPW has a materially more expensive rating reflecting, in our view, its more consistent execution track record as discussed earlier. If RBL were to achieve a revenue CAGR over our 10yr DCF horizon similar to that of TPW (which is 21% vs. 11% for RBL), our DCF value for RBL would increase from A$4.75 to A$10.75 (assuming no change to our EBITDA margin forecasts)."

This certainly makes Redbubble one to watch in the coming years.

James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of Temple & Webster Group Ltd. The Motley Fool Australia has recommended Temple & Webster Group Ltd. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Share Gainers

Two happy excited friends in euphoria mood after winning in a bet with a smartphone in hand.
Share Gainers

Why Fortescue, Lynas, PEXA, and Regis Healthcare shares are charging higher

These shares are having a strong session on Thursday. But why?

Read more »

A young man talks tech on his phone while looking at a laptop. A financial graph is superimposed across the image.
Share Gainers

Why Capricorn Metals, Insignia, Perseus Mining, and Qoria shares are storming higher

These shares are having a strong session on Tuesday. But why?

Read more »

A man clenches his fists in excitement as gold coins fall from the sky.
Share Gainers

Why Amaero, AMP, Block, and South32 shares are racing higher today

These shares are starting the week on a positive note. But why?

Read more »

Ten happy friends leaping in the air outdoors.
Share Gainers

Here are the top 10 ASX 200 shares today

It was another momentous session for ASX shares this Friday.

Read more »

Overjoyed man celebrating success with yes gesture after getting some good news on mobile.
Share Gainers

Why BHP, Catalyst Metals, Mesoblast, and Pilbara Minerals shares are shooting higher

These shares are ending the week with a bang. But why?

Read more »

Doctor doing a telemedicine using laptop at a medical clinic
Healthcare Shares

The Mesoblast share price just rocketed 38%! Here's why

ASX investors just sent the Mesoblast share price up 38%. But why?

Read more »

A businessman stacks building blocks.
Share Gainers

Here are the top 10 ASX 200 shares today

ASX shares hit a new record high today.

Read more »

A man sees some good news on his phone and gives a little cheer.
Share Gainers

Why Auckland Airport, Australian Ethical, Breville, and Clarity shares are charging higher

These shares are having a better day than most on Thursday. But why?

Read more »