The Kogan.com Ltd (ASX: KGN) share price has taken a dive of more than 7% (at time of writing) based on a Federal Court judgement.
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The Federal Court decision
Kogan advised to the ASX today that the Federal Court upheld allegations by the Australian Competition and Consumer Commission (ACCC). The ACCC alleged Kogan breached Australian Consumer Law with respect to a four day promotion it conducted in June 2018. In the promotion, Kogan advertised that consumers could achieve a 10% price reduction at checkout using a coupon code.
Kogan maintains, however, it never intended for the promotion to mislead consumers. As a result of today's decision, a further hearing will be held concerning a penalty.
The company is currently reviewing the decision and has advised it may provide an update when the review is finalised.
Additionally, a business update will be provided towards the end of this month.
Other recent updates
Kogan recently raised $20 million through a share purchase plan (SPP) announced 8 July 2020. According to its SPP booklet, Kogan intends to use the proceeds to provide financial flexibility to act quickly on future value accretive opportunities.
The $20 million raised follows a successfully completed $100 million share placement announced last month.
In its June Investor Presentation, Kogan announced it has approximately 2 million active customers. Additionally, it has increased its online market share significantly with strong growth in sales and earnings.
About the Kogan share price
Kogan is an online retail business headquartered in Melbourne. It has a diverse offering with a portfolio of retail and service businesses. Some services it offers include mobile, internet, insurance and travel. Additionally it's focused on providing affordable prices to consumers through its retail websites Kogan.com and Dicksmith.com.au.
As a result of the coronavirus pandemic, the Kogan share price, along with range of other online related businesses, have benefitted. In the past year, Kogan shareholders have been rewarded with a share price increase of over 214%.
The Kogan share price is currently trading at $16.52 which represents a fall of 7.19% today. However, the price has rebounded somewhat after the initial shock of the announcement. It will be interesting to see how this announcement will weigh on the share price until the penalty is known.
