Will the Kogan (ASX:KGN) share price making a comeback in April?

After three consecutive month-on-month losses, is the Kogan.com Ltd (ASX: KGN) share price ready to bounce back in April?

amazon shares represented by illustration of hands touching buttons on mobile phone surrounded by online shopping icons

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

March marked the third consecutive month-on-month decline for the Kogan.com Ltd (ASX: KGN) share price. With its shares bouncing 8% higher so far in April, is it time for Kogan shares to make a comeback? 

What's driving the Kogan share price lower? 

Diverging performance between retail and ecommerce shares 

Classic ASX retail shares such as JB Hi-fi Ltd (ASX: JBH), Harvey Norman Holdings Limited (ASX: HVN) and Adairs Ltd (ASX: ADH) are within an arms reach of all-time record highs. This comes off the back of a significant rebound in 2020 and a relatively stable performance so far in 2021. 

Conversely, ecommerce enabled businesses such as Kogan, Temple & Webster Group Ltd (ASX: TPW), Mydeal.com.au Pty Ltd (ASX: MYD) and Redbubble Ltd (ASX: RBL) have logged negative returns across the board this year. 

Why are ASX ecommerce shares underperforming? 

Ecommerce businesses might be able to grow faster than traditional retail, but these companies typically fetch a much higher valuation. 

This leads to the issue in March, which witnessed a significant underperformance in growth and tech-related sectors, largely driven by a surge in bond yields. The S&P/ASX200 Info Tech (ASXINDEX: XIJ) fell 5.80% in March compared to the flat performance of the ASX 200 and outperformance in sectors such as financials. 

Many ecommerce shares fetch a tech like valuation, which is the case for Mydeal, a loss-making business. As well as Redbubble and Temple & Webster, which both recently started to turn a small profit. 

While the Kogan business might be kicking goals, it's likely swimming against the tide as tech-related shares came under pressure. 

What's the outlook for the Kogan share price? 

The outlook from Kogan's half-year results was positive, noting that unaudited management accounts show that gross sales, gross profit, and adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) was up 45%, 102% and 90% respectively. The company plans to further expand its exclusive brands, develop its Kogan Marketplace and complete the integration of Mighty Ape. 

The most recent broker updates for the Kogan share price date back to 1 March from UBS and Credit Suisse

UBS reaffirmed a more cautious view on the 12-month outlook as trading might have slowed. It points to key risks being the accelerated investment in online channels by traditional bricks and mortar retailers. As a result, the broker retained a neutral rating and a $15.10 target price. 

Credit Suisse was more bullish and positive on the company's medium to long term growth prospects. It was pleased with the growth in Kogan's private label revenue and sees it as an important component of the business' value proposition. The broker retained an outperform rating with a $20.85 target price. 

The Kogan share price is currently hanging around 10-month lows of $13.03. 

Kerry Sun 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's parent company Motley Fool Holdings Inc. recommends ADAIRS FPO. The Motley Fool Australia owns shares of and has recommended Kogan.com ltd. The Motley Fool Australia has recommended ADAIRS FPO and Temple & Webster Group Ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on Retail Shares

Happy shopper at a clothes shop.
Retail Shares

The share price of this All Ords stock has jumped higher again. Here's why

Here's why Myer's share price is outperforming.

Read more »

A smiling woman at a hardware shop selects paint colours from a wall display.
Retail Shares

Wesfarmers shares recently hit a 52-week high. Can they go higher?

This business continues to impress investors.

Read more »

a jewellery store attendant stands at a cabinet displaying opulent necklaces and earrings featuring diamonds and precious stones.
Retail Shares

Would Warren Buffett buy Lovisa shares right now?

Is this a sparkly opportunity?

Read more »

Happy shopper at a clothes shop.
Earnings Results

Why did Myer shares just rocket 9%?

Investors are piling into Myer shares on Friday. But why?

Read more »

a thoughtful shopper with shopping bags wearing sparkly gold dress and matching shoes reclines on a chair with hand to chin in thought.
Retail Shares

Can Lovisa's new high profile CEO take Lovisa shares to new heights?

Is Lovisa about to embark on a new era of growth?

Read more »

A woman sits on sofa pondering a question.
Retail Shares

After soaring 244% in 5 years, how much further upside does Macquarie tip for Nick Scali shares?

The broker's expectations remain steady.

Read more »

Girl with make up and jewellery posing.
Retail Shares

Buying the dip: $5,000 invested in Lovisa shares a month ago is now worth…

It's been an outstanding first month for new Lovisa shareholders.

Read more »

Woman checking out new iPads.
Retail Shares

JB Hi-Fi share price sinks on sales growth figures

JB Hi-Fi shares are under pressure on Wednesday. But why?

Read more »