For a long time the venture capital space and also the public market valued growth over profitability. But times have changed quite a bit, and both private companies and publicly traded companies (especially tech stocks) went down pretty strong regarding their valuations over the past 12 months.
While the global economy and the stock market could still take a several more months to come back to a more positive outlook, there might already be some beaten down technology stocks that are worth checking out in the near future.
ABOUT YOU: An e-commerce growth story and a stock market tragedy
One European e-commerce champion that also experienced a massive decrease in its stock prize over the past 12 months is Hamburg-based ABOUT YOU. Founded in 2014, ABOUT YOU is one of Europe’s fastest-growing fashion platforms for young, fashion-conscious customers in 26 markets. They are counting more than 45 million active users per month and offer more than 500,000 items from over 3,500 brands.
Shortly after their IPO in the summer of 2021 their stock price was at €26. Currently, ABOUT YOU is trading at around €4,80 and as the downwards curve is recently going a bit less steep than before, there is a chance that the stock might be close to finding its bottom some day in the near future.
ABOUT YOU is still founder-led, and CEO Tarek Müller and the company’s management team recently reassured that the company is on track to reach profitability in the next business year 2023/24. Tarek Müller himself seems to be pretty optimistic about the future outlook of the company. Earlier this year he personally bought additional shares in ABOUT YOU – 125,000 shares at a stock price of €7,97 (total value of roughly €1 million). Other ABOUT YOU team members as well as Supervisory Board Members also bought more shares in the company earlier this year.
ABOUT YOU is already profitable in core markets like Germany, and they seem to have a pretty good understanding of the path/time to profitability for each of the new markets an countries they enter. But even if ABOUT YOU would not reach profitability as soon as planned, they still have cash reserves in the bank of more than €310 million.
Aside of the pure e-commerce business of ABOUT YOU, the company also has a very interesting SaaS offering called SCAYLE, which is a an enterprise commerce engine based on ABOUT YOU technology. The revenues for this product are growing nicely and it enables corporates to realize their D2C ambitions.
Stock Price Decline vs. Revenue Growth
It’s no secret that most of the recent unicorns are not profitable yet and in the recent past ecommerce scale-ups were often valued way above a 3 x revenue multiple. The German e-commerce giant ABOUT YOU plans to reach around €2 billion in revenues at the end of this business year and the company’s current market cap is at round €900 million. This means the current valuation comes at a revenue multiple of just about 0.45, which is quite rare for a growth company that is close to reaching profitability.
Recent Analyst Ratings
In the past two weeks, Deutsche Bank Research, Goldman Sachs, JP Morgan, Baader Bank and Jeffreys shared their updated Analysts insights regarding ABOUT YOU’s stock and the average price target of those 5 latest Analyst ratings is €10.9 – about 125% above the current stock price.
Future Outlook
Despite the economic downturn and a decrease in consumer spendings, ABOUT YOU keeps on growing, and although e-commerce growth slowed down strongly in the current post-pandemic phase, most people would agree that the trend of more and more local and in-person retail moving online is still intact.
According to ABOUT YOU CEO Tarek Müller, the company has no business footprint in Russia or Ukraine and is therefore not directly impacted by this ongoing conflict. At least not on a supply chain side.
That being said, ABOUT YOU is a growth company in a growing market and if it manages to reach profitability as planned in the near future, we’re confident that the stock could be able to have a quite attractive stock price development over the coming years.
Disclaimer: This article is not meant to be investment advice. Please do your own research before making any kind of investment decisions. The author of this article doesn’t own any ABOUT YOU shares – neither directly nore indirectly. By the way: We’re now planning to write about interesting European tech stocks on a more regular basis. Stay tuned!