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Why the Bubs (ASX:BUB) share price is up 5% today

The Bubs Australia Ltd (ASX:BUB) share price is on the march today, up 5%. Here’s what might be pushing up the goat formula company’s shares.
The post Why the Bubs (ASX:BUB) share price is up 5% today appeared first on The Motley Fool Australia. –

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The S&P/ASX 200 Index (ASX: XJO) is having a fabulous day today, up 0.51% to 6,921 points, a new 52-week high for the index. But the Bubs Australia Ltd (ASX: BUB) share price is doing one better. Putting the fab in fabulous, Bubs shares are up 5.15% at the time of writing to 51 cents a share. This rise puts Bubs close to 11% from the lows we saw just last week, when Bubs hit a new 52-week low of 46 cents.

As that low implies, it’s not such a good view of Bubs if we zoom out. Back in May last year, this was a company that hit $1.19 a share, which was pretty impressive at the time considering COVID lockdowns were still in full swing.

It has been lower and lower for Bubs ever since.

So what’s causing this bump today? And have Bubs shares perhaps turned a corner?

Turning the corner?

So it’s worth remembering that Bubs, like many ASX companies, was hard hit by the coronavirus pandemic. A large part of Bubs growth in recent years has come from the daigou supply chain, which involves mostly Chinese buyers reselling products to the Chinese market. These supply lines ran largely through tourism, which of course has all but dried up over the past year. As such, Bubs recorded a 23% drop in gross revenues in its earnings report for the first half of the 2021 financial year (1H21). As a result, Bubs also recorded an earnings loss of $14.4 million for the half, significantly above the $5.3 million loss for 1H20.

However, there are signs that Bubs is turning things around. In a quarterly update for the period ending 31 December 2020, Bubs told investors that revenues were up 36% compared to the quarter ending 30 September 2020. That implies that a significant recovery may be underway.

Of course, that was all reported to the markets a month or two ago. So it’s unlikely to be affecting the company share price today. But that undercurrent may still be important.

Bargain hunting at Bubs

Perhaps the most likely force driving Bubs’ share price higher today is its most recent low. Bubs has made a name for itself as an ‘ASX growth share to watch’ over the past 5 years or so. Remember Bubs climbed more than 200% between January and May 2019. We could just be seeing some bargain hunting going on. When a company make a new 52-week low, it tends to get some attention from value investors. We are seeing similar bounces in other ‘oversold ASX growth shares this week as well. These include Afterpay Ltd (ASX: APT) and A2 Milk Company Ltd (ASX: A2M).

Whatever the cause, Bubs shareholders would probably be pleased with what the market has given out today.

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Sebastian Bowen owns shares of A2 Milk. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of BUBS AUST FPO. The Motley Fool Australia owns shares of and has recommended A2 Milk. The Motley Fool Australia owns shares of AFTERPAY T FPO. The Motley Fool Australia has recommended BUBS AUST FPO. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

The post Why the Bubs (ASX:BUB) share price is up 5% today appeared first on The Motley Fool Australia.

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