The Redbubble Ltd (ASX: RBL) share price has fallen to around $5, I think it could be a really good buy right now for the long term.
Redbubble is an e-commerce business in the artist product space. It has a global network of third party printers and shippers. Artists provide the designs and then Redbubble (and others) do the rest to create and ship products like wall art, t shirts, stationery, phone cases and so on. You can check out the Redbubble website yourself if you’re curious about the range of products offered.
How much has the Redbubble share price fallen?
The Redbubble share price has been dropping in recent times. It has dropped 22% over the last month and 27% since 25 January 2021.
That’s nowhere near as painful as the drop in COVID-19 crash, but I think it makes Redbubble shares look more attractive considering it continues to grow.
How much is it growing?
In the FY21 half-year result, it said that marketplace revenue of $353 million was an increase of 96%. A doubling of revenue is good for almost any company in my opinion. Gross profit grew even quicker, going up 118% to $144 million. EBITDA (EBITDA explained) went up by over 1,000% to $48.8 million, whilst EBIT came in at $41.8 million.
Whilst some investors may not concentrate on cashflow statistics, I think it’s possibly the best profitability measure – in the half-year result, operating cashflow went up from $41 million to $80 million.
The company said that healthy demand has continued into January, with marketplace revenue (paid) growing by 66%, or 82% on a constant currency basis.
Long-term focus of management
I liked the comments of Redbubble management after the result. Redbubble CEO Michael Ilczynski said:
“The strategic priority for the group is now to ensure we extend the market leadership we have established. We intend to invest in both the artist and customer experiences, to improve loyalty and retention and to ensure long-term growth.”
Summary thoughts
I wouldn’t expect Redbubble to continue to generate triple digit revenue growth because of the difficulty of doubling bigger and bigger numbers. However, with Redbubble trading at 38 times FY20’s free cashflow, I think it looks attractively good value with how scalable the business appears to be and revenue is still growing very quickly.
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