Following last Monday's quarterly update, KGN's bugbear of falling quarterly gross profit growth was turned around (somewhat). Over the current financial year, it's been:
So unlike the January announcement, KGN didn't crash. In a relief for long-term holders, it ticked up a little on the daily chart.
Seen in isolation, last week's price gain wasn't that huge - maybe it was even a tad underwhelming. But looking at the big picture, the important thing to note is that KGN has begun closing the big gap from the January business update.
[1]In fact, Thursday's trade closed at $7.00, which is a new closing high from the gap down-era.
[2] Friday closed lower at $6.91, but that's double the $3.45 intraday low from March 13th:
While it was good to see those things on the chart, last week did see four red candlesticks, with some taller upper wicks than usual. This suggests that shorts or profit-taking are occurring as the trading day progresses. It could also suggest that existing momentum is starting to slow down. The RSI is still around the 70 range.
From a charting viewpoint, this week's important challenge is to counter last Thursday's candlestick - if it's shooting star, it may signal a reversal.
@JayWin - after reading the quarterly update, two bits stood out to me in terms of the future outlook:
The first bit was:"
Overall Operating Costs (Marketing Costs, Variable Costs, People Costs and Other Costs) grew by more than 37% as the Company strategically increased its marketing activities in order to grow Active Customers."
After reading that, I embellished the old adage: "it takes money [in 37% additional marketing costs] to make money [repeat transactions from all the new customers that bought from KGN for the first time in March 2019]".
I think it's crunch time for their data analytics people, who will now be expected to find ways of holding onto those customers. It will also be a challenge for their customer service people (in terms of handling any product complaints).
It reminds me of the A2 Milk Company doing a similar thing a year or so ago. And with A2M reaching all-time highs in the last few weeks, I daresay their marketing investment is paying off already.
The second quote that stood out to me was:"
One of Kogan.com’s delivery partners was the subject of a cyber attack, resulting in the loss of tracking information for thousands of items in transit to Kogan.com customers, and various other operational issues. Kogan.com responded by diverting shipments to alternate delivery partners for the period of the disruption."
I felt relieved reading that. It could have taken a heavy toll on KGN if it couldn't find a logistical alternative so quickly. This sounds like the mark of not just a growing company, but an
agile company that can change its operational processes efficiently (at big scales).
And before I forget, I also checked those quotes from the past Q2 posters (in my other post last Sunday). To use two examples:
So the original quotes/categories were correct - but yes, it was unusual how the holders were bearish, yet the non-holders were bullish at the time.
So in conclusion, I think Q4 will be a crossroads - but also a golden opportunity - in KGN's relatively brief history. It could make a steady hit to second base and grow steadily - but I think Ruslan Kogan will be going for a home run, by chasing repeat purchases from new customers.
If he hits the ball cleanly, it could be a cracking presentation for the FY19/20 full-year results.
(20min delay)