DISC: Held IRL and SM
Will continue to hold, mostly for the reason I can best describe as "I have made my bed now I must lie in it".
While it is tempting to assume that their meteoric revenue growth has stalled permanently and their margins won't get back to what they were previously. I'm prepared to give them the benefit of the doubt due to:
- The (even now, still) unprecedented times they operate in.
- The staggering growth they went through in 2020 - which affords the the time to "take a breather" and re-adjust, I think.
- A solid track record of online retail dominance in Australia
- Ruslan Kogan's 15% stake in the company (where we go, he goes)
So, I am prepared to give them 2 years from here to get revenue growth back above 15% and net profit margins above 3% and only then will I sell.
Now I could easily be wrong, and the best course of action could be to sell now and put the money in something in which I have higher conviction (which is very tempting - my spidey senses tell me that Amazon might just wipe the floor with them). But I feel I need to draw a line with myself - I can't be flip-floping just because they have hit a hurdle and market sentiment has gone against them. So I hold.
However, even if they fail I still win, I win because of the lessons I have learned:
- Consumer Retail is hard - you can't just double your sales without thinking about logistics and associated costs.
- If I buy a stock and it triples in 6 months - I should reassess it's value, be very critical if it can be justified, and consider trimming or selling (as opposed thinking I'm such a smart boy, patting myself on the back, and just assuming it will continue to moon).
