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Kogan Flies 50% on Poor Earnings

After a brilliant trading day for tech stocks both domestically and abroad, fan favourite Kogan has surged ending the day over 50% higher with shares trading at $4.70 each.

The reason for this came after the company released their “July 2022 Business Update”. The main highlight came that they would expect to report an adjusted EBITDA of $19.1 million for FY 2022. Given the struggles it has had with margins this year, this appears to have come as a big surprise to the market. Investors were clearly expecting something different as the company reported negative EBITDA for the third quarter.

For the 12 months ended 30 June, Kogan expected to report total gross sales of $1,180 million and gross profit of $184.6 million. This represents a 0.1% increase but also a 9.4% decline year on year, respectively.

Another positive is a decent reduction in the company’s inventories. They have reduced from $193.9 million at the end of March to $161.1 million at the end of FY 2022.

However, a negative that came out of the report is around Kogan’s active customer numbers. At the end of March they reported 4,099,000 active customers but they finished the period with 3,972,000 active customers.

Various downrampers and heavy short selling on the company coupled with a largely negative view of the company’s prospects have led to the negative sentiment on the share price. Kogan’s shares were held one of the most heavily shorted stocks on the market, with 8.2% of total shares shorted.

It is now most likely those short sellers are trying to close their positions today, adding to the buying pressure and creating what is known as a short squeeze.

Kogan’s founder and CEO, Ruslan Kogan stated:

“Times are changing. In uncertain times, people don’t want to alter their lifestyle but they are happy to shift the way they shop. We know that in an environment where great value becomes even more important, serves an important need…”

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