Redbubble Limited

RBL Details

Removal from S&P/ASX 200 Index: Redbubble Limited (ASX: RBL) is engaged in the operation of online marketplaces through its websites at Redbubble.com and TeePublic.com. The company has been recently removed from S&P/ASX 200 Index and will be effective prior to the opening of trading on 20 December 2021.

FY21 Performance Overview:

• The company has reported that 9.5 million customers made transactions in its platforms, amounting to ~$701 million GTV in FY21.
• Its business model has assisted 728,000 artists to earn a record ~$104 million in FY21, through the sale of products in the company’s marketplaces.
• Revenue from mobile platforms has been gaining traction for the company and has contributed ~55% of total sales during the year.
• It ended the period with a strong balance sheet, having a cash position of ~$99 million and no debt.

Revenue Trend (Source: Analysis by Kalkine Group)

Key Risks: The company is dependent on its technological platform for seamless flow of business, and any disruption on it can impact the profitability of the Group.

Outlook: The company has reiterated that it expects its FY22 marketplace revenue to be slightly higher than FY21. It is also targeting for planned investments, which might impact gross margin, marketing and opex lines. The Group remains optimistic on its medium to long-term prospects with expansion in its marketplace revenue.

Valuation Methodology: EV/Sales Multiple Based Relative Valuation (Illustrative)

Source: Analysis by Kalkine Group

*% Premium/(Discount) is based on our assessment of the company’s NTM trading multiple after considering its key growth drivers, economic moat, stock's historical trading multiples versus peer average/median, and investment risks.

Stock Recommendation: The stock of RBL is trading below its average 52-weeks' levels of $2.620-$7.350. The stock of RBL gave a negative return of ~47.78% in the past one year. The stock has been valued using an EV/Sales multiple-based illustrative relative valuation and arrived at a target price of low double-digit upside (in % terms). The company might trade at a slight discount to its peers’ median EV/Sales multiple, considering the drop in marketplace revenue, and expected margin pressure in the near term. For the purpose of valuation, peers such as Temple & Webster Group Ltd (ASX: TPW), Kogan.com Ltd (ASX: KGN), Adore Beauty Group Ltd (ASX: ABY), and others have been considered. Considering the current trading levels, indicative upside in valuation, increase in customers & sellers, increased traction in mobile platforms, and the key risks associated with the business, we recommend a ‘Speculative Buy’ rating on the stock at the current market price of $3.010, as of 10 December 2021, 10:30 AM (GMT+10), Sydney, Eastern Australia.

RBL Daily Technical Chart, Data Source: REFINITIV

Note 1: The reference data in this report has been partly sourced from REFINITIV.  

Note 2: Investment decision should be made depending on the investors’ appetite on upside potential, risks, holding duration, and any previous holdings. Investors can consider exiting from the stock if the Target Price mentioned as per the Valuation has been achieved and subject to the factors discussed above.

Technical Indicators Defined:

Support: A level where-in the stock prices tend to find support if they are falling, and downtrend may take a pause backed by demand or buying interest.

Resistance: A level where-in the stock prices tend to find resistance when they are rising, and uptrend may take a pause due to profit booking or selling interest.

Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.

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