Can Reebonz’s (RBZ) Expansion Drive the Stock Higher?


Online luxury-goods exchange platform Reebonz (RBZ) is making moves in their jewelry business.

The Singapore-based company announced this week that it has expanded its ‘Sell to Reebonz’ service to selected jewelry and accessories, as it aims to deepen its relationship with customers and provide more options on products that can be sold back to the platform.

As a reminder, ‘Sell to Reebonz’ allows for sellers to sell-back items to RBZ in exchange for immediate spending credits to be used for future purchases on the platform, thus enhancing the customer experience and increasing stickiness and repeat actions. Prices are guaranteed by the Sell Catalog on RBZ site and the option provides another instance of RBZs providing a dual sided marketplace, while incentivizing repeat purchases.

In a research note issued yesterday, Maxim analyst Allen Klee discusses the implications of the expansion on Reebonz. Subsequently, the analyst reiterates a Buy rating on Reebonz stock with $11 price target, which implies over 320% upside from current levels. (To watch Klee’s track record, click here)

The expansion of the ‘Sell to Reebonz’ service should “help expand the company’s profitable marketplace business,” Klee noted. 

Klee believes the service provides “two opportunities for future revenue,” including “from a purchaser of the used product and the second from the seller of the product using their store credit.” With the marketplace, the analyst says the company can “differentiate itself in the higher margin Marketplace businesses based on its data on used luxury good prices and the breadth of its offerings.”

Overall, the analyst has a positive view on the luxury e-commerce market in Asia/Pacific (APAC), based on improving wealth and smartphone penetration rates.

On a different note, Klee points out that, “access to new capital should re-accelerate growth,” and help the company to “increase marketing spend.” This is crucial, as Klee reports that between 2016 and 2018 marketing was so important that the company generated between $16-$20 of revenue for each $1.00 of variable marketing spend. 

Overall, aside from this rating, RBZ has only received one other analyst rating in the last three months. Five-star Roth Capital analyst Darren Aftahi has a Buy rating on the stock with a similar $11 price target- suggesting he aligned with Klee’s current take on this stock. (See RBZ’s price targets and analyst ratings on TipRanks)

 

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