Stock of the day: Cettire

(AI video summary)

This video was created on 24 September for IG audiences by ausbiz.

Stock of the day: Cettire

ASX code: CTT

Suggestion: Sell

Cettire's stock surge

Cettire, the well-known online fashion retailer, has recently seen a significant surge in its share price following the release of its audited full-year financial report. Despite a decrease in annual profit, the company's active customer base has expanded significantly. This article explores the dynamics behind the stock's unexpected rise and offers insights into the broader implications for investors.

Analysts attribute the remarkable 50% rise in Cettire's stock price primarily to a short squeeze. Prior to the financial results' release, Cettire was heavily shorted due to widespread investor concerns over its financial reporting and business model. It was the sixth most shorted stock on the ASX 200, with short positions exceeding 10% of its traded volume. The completion of the audit and subsequent financial disclosures led to a rapid revaluation of the stock as short sellers rushed to cover their positions, further fuelling the price increase.

Financial performance overview

The audited report revealed that Cettire secured a profit of $10.5 million in the last fiscal year (FY), down from $16 million in the previous period. However, the number of active customers grew to approximately 700,000, a 64% increase from the prior year. This growth in customer base, amid financial challenges, has sparked significant interest among investors and analysts.

Market response and expert analysis

Market experts are urging caution, suggestung investors to consider selling their shares to capitalise on the current price surge. Despite the stock's performance, concerns remain about the underlying fundamentals of Cettire’s business model. The appointment of Caroline Elliott as an independent non-executive director is viewed as a positive step towards stabilising the company's governance structures.

Investors interested in Cettire should consider the risks involved in share trading carefully before making any investment decisions. Discover our powerful trading platforms and tools as well as other trending stocks below.