Kogan’s surge worth millions to top duo

Shares in Kogan.com touched $13 on Friday as the company’s market value eclipsed that of Myer and David Jones combined.

Ruslan Kogan, founder and CEO of Kogan

Shares in Kogan.com touched an all-time high of $13 on Friday as the potency of its online shopping platform saw the company’s market valuation eclipse that of Myer and David Jones combined and highlight the growing power of internet retailers.

It has also put a rocket under the lucrative options set to be awarded to founder Ruslan Kogan and chief financial officer David Shafer, with their in-the-money options packages — struck at a price when the sharemarket collapsed in March — growing in value by millions of dollars.

Kogan.com issued a trading update for April and May that showed shoppers were swarming to its online store during home isolation.

Some 126,000 new active customers joined its ranks to take its total active customers to 2.074 million.

Gross sales grew more than 100 per cent over the fourth quarter to date and gross profit was up more than 130 per cent.

The company said adjusted earnings before interest, tax, depreciation and amortisation grew by more than 200 per cent and its average run-rate adjusted EBITDA over the period was $7m per month.

Kogan.com has enjoyed booming success in the wake of the pandemic, along with other online retailers, and its shares rallied more than 10 per cent on Friday to touch $13 before closing up 8.6 per cent, or 98c, at $12.38. The stock is up more than 230 per cent since January last year for a market capitalisation of $1.1bn.

The share price rally has created potential instant millions for Mr Kogan and Mr Shafer. In May the board of Kogan.com said it planned to issue $53m worth of in-the-money options to the duo, using the sharemarket rout of recent months as a pricing point.

Initial estimates for the options package were that for both Mr Kogan and Mr Shafer it will have an exercise price of about $5.28 a share — with that price dragged lower by the collapse of the sharemarket between February and April. These newly minted bonuses would deliver 3.6 million options to Mr Kogan and 2.4 million options to Mr Shafer.

On the current share price, Mr Kogan’s options are worth $44.56m and Mr Shafer’s options $29.7m. Shareholders will need to vote on the options deal.

RBC Capital Markets analyst Tim Piper said the trading update highlighted that Kogan.com was a clear beneficiary from the structural step-change in online shopping. “This online shopping shift has continued to play out through May, and Kogan.com’s marketing activity has resulted in strong operating leverage in May,” Mr Piper said.