Kogan Smashed As Shares Head To $1.00 Say Experts
Loud mouth retailer Ruslan Kogan, remained remarkably quiet yesterday as his shares got smashed on their ASX debut falling 16% from their opening price of $1.80 now analysts are asking the regulator to probe the Companies financials.
Yesterday’s laughing stock, one leading retailer said of Kogan shares “They will be $1.00 by Xmas”. Gerry Harvey the CEO of Harvey Norman said that Kogan sells “unbranded shit”, some consumers who have purchased goods from Kogan.com would agree.
The plunge wiped more than $14 million from founder Ruslan Kogan’s stake.
Remember this was the guy who said that he was doing $400M in revenue and that after this less than spectacular float he would be heading up to revenues in the billions.
Kogan Group financials released yesterday for the six months ending December 2015 reveal that everything is going backwards, profits and revenues are down and his trade creditor liabilities are up.
Kogan.com shares hit the market at 1200 AEST at $1.80, and within 40 minutes had dropped 12.2 per cent to $1.58.
They closed 24 cents weaker, a drop of 16.7 per cent, at $1.50, while the broader market was stronger, including the retail sector.
CMC Markets chief market strategist Michael McCarthy said the disappointing market debut was a concern.
“Kogan has been smashed,” he said.
“It is damaging to the market to see such a well touted stock perform so badly on its first day.”
The share price falls didn’t make sense given such strong institutional demand for the stock, Mr McCarthy said.
“I wonder if there was a bit of over-egging of the situation in the lead up, because it is certainly not trading like a stock that had four times over cover,” he said.
“You have to ask why some of that oversubscription isn’t in the market picking up its shares, which is at a relative bargain compared to the float price.
“Something is not adding up here and the regulator may have to look at it.” He said.
The poor market debut wiped $14.2 million from the value of Mr Kogan’s 50.5 per cent stake in the business, to $70.6 million.
Three years ago was bragging that he planned to lift revenue from $200 million to $2 billion by 2017.
The prospectus reports that the company lifted revenue to just over $200 million for the financial year just ended.
Kogan claims in his prospectus that he expects to generate sales of $201.1 million for the financial year just ended and report a loss of $2.9 million.
The SMH pointed out that Harvey Norman reported a net profit of $269 million last year.
The is some good news for Kogan, he and his partner David Shafer did manage to pocket $15 million from the sale which should at least pay for a few glasses of red wine as they celebrate getting an IPO away for a Company that several people had been offered in a trade sale and had rejected because of the risks associated with the business.
In comparison Gerry Harvey collected a dividend of $66 million last year from Harvey Norman. This is the guy that Ruslan Kogan claims “does not get it” when it comes to online retailing.
Ruslan Kogan is also the loudmouth who said that Apple was set to dump their partnership with JB Hi Fi and Harvey Norman, that didn’t happen either.
Kogan once explained about his Harvey Norman fixation – a start-up needs an enemy “otherwise there is no point in being in business”.
While respecting Gerry’s legacy as a successful retailer, “In 2014 is he doing things the right way and how they should be done? I don’t think so. I know that our business is growing fast and it’s only a matter of time before we catch up,” said Kogan at the time.
As one analyst said yesterday “All Kogan will catch is Gerry’s wake as he smashes straight through Kogan”.
“And when he’s ducked that wake he will have to take on Aldi” who will swamp him.