One of the best performers on the All Ordinaries index in 2020 has been the Redbubble Ltd (ASX: RBL) share price.
The ecommerce company's shares have recorded in an incredible gain of 415% since the start of the year.
Why is the Redbubble share price up over 400% in 2020?
Investors have been fighting to get hold of the company's shares this year after the pandemic accelerated the shift to online shopping.
This led to Redbubble delivering a very strong result in FY 2020. For the 12 months ended 30 June 2020, the company reported 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.
Pleasingly, despite bricks and mortar stores opening back up since then, this hasn't slowed the company's growth.
For example, during the first quarter of FY 2021, Redbubble reported revenue of $147.5 million, up 116% (122% on a constant currency basis) on the prior corresponding period.
Things were even better for its gross profit, which increased 149% (157% in constant currency) to $64.5 million for the quarter.
Positively, while fashionable COVID-related face masks had been a key driver of growth in FY 2020, they are playing less of a role in its growth this financial year.
In a note from October, Goldman Sachs commented: "Marketplace revenue was in line with GSe but strong gross margins were the positive surprise. RBL delivered 116% marketplace revenue growth in 1Q21 despite face mask revenue reducing as a percentage of total revenue through the quarter (27% in July to 14% in September)."
What else has helped drive the Redbubble share price higher?
Another key driver of its stellar share price gain was the aforementioned note out of Goldman Sachs.
The broker has been particularly bullish on Redbubble this year and currently has a buy rating and $6.25 price target on its shares.
It believes Redbubble is capable of growing its revenue and earnings at a strong rate over the coming years.
Goldman explained: "We remain Buy rated on RBL driven by: (1) expansion of its TAM through continued broadening of its product categories, (2) potential growth from increasing repeat usage on its platform (still relatively low at <1.5x p.a.), (3) further operating leverage as we expect RBL to manage cost growth well below revenue growth over our forecast period (we forecast opex to grow at a 7% CAGR FY20-FY23E vs. a marketplace revenue CAGR of 18% driving EBIT margins from 1.2% in FY20 to 11.3% in FY23E and an EBIT CAGR of 151%)."
If Goldman Sachs is on the money with its recommendation, the Redbubble share price could be destined to beat the market again in 2021.
