ASX Stocks On Sale? Boxing Day Edition 🛒

TL;DR

A comprehensive analysis of ASX companies that have struggled in 2021 and whether there are potential opportunities for recovery.

Transcript

what a year 2021 has been some companies some sectors have pushed towards new heights while others whether as a result of the broader macroeconomic environment or internal company struggles have really struggled and traded into headwinds today in the spirit of boxing day a day where there's plenty of sales potential bargains and people like to head... Read More

Key Insights

• 😀 ASX companies such as A2 Milk, Appen, and Kogan have faced challenges due to the pandemic's impact on their respective industries.
• 🙈 The e-commerce sector has seen both growth opportunities and increased competition.
• 💝 Valuation compression and regulatory concerns have affected buy now, pay later companies, including Sezzle.
• 🧑‍🎨 Redbubble benefits from network effects and scaling as more artists and customers join its platform.
• 🥺 Transitioning business models, such as Appen's shift from services to product-led, can pose initial challenges but may offer long-term growth opportunities.
• 🫡 The post-pandemic recovery poses uncertainties with respect to fiscal stimulus, monetary policy, inflation, and interest rates.
• 😄 Supply chain bottlenecks are expected to ease, supporting economic recovery.

Questions & Answers

Q: What challenges did A2 Milk face in 2021?

A2 Milk saw disruptions from border closures and reduced mobility, impacting its primary sales channel, the daigou channel. This led to a decline in revenue and profitability.

Q: How is Appen transitioning its business model?

Appen is shifting from a services-based business to a product-led business for more consistent and sustainable revenue streams. They are diversifying their customer base and have developed a new reporting framework.

Q: How did Kogan's inventory surplus affect its profitability?

Kogan over-ordered as demand normalized post-lockdowns, resulting in an inventory surplus. This impacted costs and margins, affecting their profitability.

Q: What strategy is Redbubble focusing on in the short to medium term?

Redbubble aims to prioritize top-line growth by attracting more artists and customers to its online platform. They expect growth in customers as more artists join the platform.

Summary & Key Takeaways

• A2 Milk has faced challenges due to disruptions from border closures and reduced mobility, resulting in a drop in revenue and profitability. Investors are looking for a resumption of growth trends.

• Appen experienced difficulties during the pandemic, including a slowdown in digital ad spending. They are transitioning from a services-based business to a product-led business, aiming for more sustainable growth.

• Kogan faced an inventory surplus as demand normalized after lockdowns, impacting costs and profitability. The e-commerce industry's competitive landscape is evolving, providing opportunities for companies to gain market share.

• Redbubble is focusing on top-line growth by attracting more artists and customers to its online platform. Demand for e-commerce remains a question, but Redbubble benefits from flywheel effects as it scales.

• Sezzle and other buy now, pay later companies have experienced valuation compression amid increased regulation and competition. Sezzle's upcoming US IPO could provide a catalyst for growth.