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Why the Digital Wine (ASX:DW8) share price is up an astonishing 18%

Digital Wine Ventures Ltd (ASX: DW8) hit a 5-year high in today’s morning trade. Here’s a closer look at what’s driving these gains.
The post Why the Digital Wine (ASX:DW8) share price is up an astonishing 18% appeared first on The Motley Fool Australia. –

ASX shares higher

The Digital Wine Ventures Ltd (ASX: DW8) share price hit a 5-year high of 9.5 cents in morning trade. At the time of writing, shares in the online beverage distributor are selling at 9.1 cents, up 18% on yesterday’s close. This rise occurred after the company announced massive increases on one of its sales platforms.

In comparison, the S&P/ASX All Ordinaries Index is up only 0.7% in morning trade.

Let’s take a closer look at what’s sent the Digital Wine share price soaring today.

What did Digital Wine announce today?

In a statement to the ASX, Digital Wine announced a monumental 931% year-on-year rise in the number of wine cases shipped via its platform WINEDEPOT during February. The company confirmed that 20,864 cases of wine were shipped last month. The company also stated this was a 28% increase on January 2021.

In further good news for investors, 9,494 orders were processed in February. That’s a 918% increase on February 2020 and a 32.4% increase on January 2021. The average amount of cases per order shipped is 2.2.

As well, the announcement detailed that 26 new suppliers are signing deals with the WINEDEPOT platform.

What is WINEDEPOT?

Digital Wine’s WINEDEPOT aims to streamline wine and beverage distribution through technology. It is both a consumer-facing and business-to-business operation. Many of its customers are wine traders, as well as traditional retailers and consumers.

The company generates revenue through a mixture of market trading fees, channel management fees, logistics fees, subscriptions, and liquidity fees.

Digital Wine half-yearly report

For the 6 months ending 31 December 2020, Digital Wine recorded a net loss of $2.4 million. In the prior corresponding period (pcp) it was an approx. $830,000 loss.

A $14,000 gross profit in the pcp became a $60,000 loss. However, revenue was up 1041.8% on the pcp to total $991,000.

Losses from administration expenses were up 76% to total $815,000. Advertising expenses were up 247.7% totalling $265,000 for the half year.  Significantly, salaries and wages went from $66,00 in the pcp to $948,000. This equates to a 1,336.4% rise.

Digital Wine share price snapshot

This time last year, shares in the venture were trading at half a cent each. If an investor bought back then, they would be sitting on a jaw-dropping 1,760% increase on their investment.

Digital Wine has a current market capitalisation of $151.4 million.

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Motley Fool contributor Marc Sidarous has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. 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 Digital Wine (ASX:DW8) share price is up an astonishing 18% appeared first on The Motley Fool Australia.

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