Greed Weakens Kogan Brand, As Directors Move To Sell Down Shareholding
Ruslan Kogan and the less flamboyant David Shafer have been left licking their wounds after a botched attempt to sell off $100M worth of shares which the market read as the pair of directors of Kogan’s online business trying to take a cashed up exit from the Kogan online business, a move that ChannelNews had tipped would happen previously.
Earlier this week we were also sceptical of Kogan’s ability to make a dent in the house brand appliance market up against the like of Aldi, Winnings Appliances and mass retailers such as The Good Guys, JB Hi Fi and Harvey Norman when they issued a statement to the ASX. Some now believe the appliance announcement was designed in part to raise the stock price just as the founders were trying to flog off their shares.
The aborted share sale by the directors has seen investors now rushing to evaluate their investment in the online retailer, they voted by taking the stock down 14% after it rose 7.5% off the back of the questionable appliance statement.
The day prior to the aborted sale Kogan was out doing what he does best, creating spin for his online business the stock rose 7.5% off the back of the appliance announcement, “ripe for the picking”, he said.
Then news leaked out that Kogan and CFO David Shafer were trying to sell a monster stake in their business — some 10 per cent of the company — the very night of announcing their impending business expansion.
Despite rumours of a major sell off Kogan and Shafer couldn’t get the placement away, their brokers Canaccord, Macquarie Capital and UBS struggled to find buyers and investors were sceptical of the move and more importantly the future of the business.
It’s not the first time Kogan has sold just after good news.
Today their shareholding in the Company has dwindle in value by $29.2 million and $10.5 million respectively as the stock tumbles 9.5 per cent from its Friday close.
Another problem for Kogan, is that the timing of their appliance statement, and their decision to sell a chunk of shares in the Company. coincided with Amazon ramping up competition in a move that could impact Kogan.
A massive end of year Amazon financial sale has been followed up by extensive TV advertising for the US online giant who is in a strong position to buy better than Kogan and have deep pockets to out market Kogan.