Redbubble’s Shares Plunged Post The Release Of Thanksgiving Weekend’s Sales Update

  • Nov 28, 2018 AEDT
  • Team Kalkine
Redbubble’s Shares Plunged Post The Release Of Thanksgiving Weekend’s Sales Update

On 28 November 2018, Redbubble Limited (ASX: RBL) made an announcement regarding the trading performance for Redbubble and TeePublic over the Thanksgiving weekend. Following the announcement, the share price of the company decreased by 10 percent as on 28 November 2018, around mid-day trading.

The company’s revenue for the five days of the Thanksgiving weekend which ended on 26 November 2018 is estimated at AUD$12.5 million. This revenue is 23.4% is higher than the revenue of last year’s Thanksgiving weekend. The company earned a revenue of AUD$9.4 million from Redbubble marketplace which is 18.2 percent higher on YOY basis. Further, the company earned a revenue of AUD$3.1 million from TeePublic marketplace which is 42.2 percent higher on YOY basis.

At the time of releasing the 1Q F2019 results, the company informed that Redbubble marketplace has been experiencing challenges in organic search traffic due to a Google algorithm change in September and a more significant one in early October. The company has experienced lower rates of growth due to similar changes in the past and successfully accelerated from those levels to be in-line with previous quarterly trends after actions to respond to the changes were taken. In response to the most recent change, the company took several measures in a timeframe to generate a positive response in advance of the Thanksgiving period. It has been estimated that the impact of the Google algorithm changes to date on Product & Shipping Revenue and Operating EBITDA has been approximately AUD$5.0 million and AUD$1.8 million, respectively. As a part of prudent cash management, the company has taken precautionary action to slow incremental operating expenditure.

The TeePublic marketplace which was recently acquired by Redbubble has delivered a strong growth rates of 44.8% during the first few weeks as a part of the Redbubble Group. As part of the company’ long term strategy of Customer Loyalty, Redbubble is trying to gain positive momentum in loyalty metrics as a result of investments made in deepening customer relationships. The company is expecting a growth recovery from the measures taken till now and further growth initiative delivery in the coming weeks and months. However due to the uncertainty regarding the timing of sustained organic search sales growth, there is some downside risk to its previous Revenue growth and Operating EBITDA guidance. As a result of the acquisition of TeePublic, the company is now expecting to generate a positive Operating EBITDA and cash flow result for FY2019.

Recently on 19 November 2018, the company announced that it has successfully completed the retail component of its fully underwritten 1 for 13 pro rata accelerated non-renounceable entitlement offer which was announced earlier on 24 October 2018. This completion of the Retail Entitlement Offer represents the final stage of Redbubble's A$60.6mn equity raising which includes the Entitlement Offer and a fully underwritten institutional placement.

In the last six months, the share price of the company decreased by 24.09 percent as on 27 November 2018. RBL’s shares traded at $0.990 with a market capitalization of $278.65 million as on 28 November 2018 (AEST 1:55 PM) and the stock was seemingly down as investors expected for a better update.


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