Why Are Kogan (KGN) and Coronado (CRN) Falling Today?
By Jason McIntosh | 26 January 2025
Investors faced sharp share price falls in Kogan.com Ltd (ASX: KGN) and Coronado Global Resources Inc (ASX: CRN) following disappointing updates that failed to meet market expectations.
Kogan fell 15.3% to $5.06, while Coronado hit a 52-week low, dropping 6.5% to 66.5 cents. Let’s explore the key reasons behind these falls, their technical outlook, and strategies for managing risk.
Kogan.com Ltd (ASX: KGN)
Kogan’s half-year trading update for FY2025 fell short of market expectations, resulting in a 15.3% share price drop to $5.06. Investors reacted strongly to issues at Kogan’s subsidiary Mighty Ape and concerns about sustainable profitability.
Key Updates:
- Half-Year Update Disappointment: Adjusted EBITDA of $25.3 million missed consensus estimates, overshadowing 10.3% gross sales growth to $492.5 million.
- Mighty Ape Challenges: Implementation and technology issues temporarily impacted Mighty Ape’s sales and profitability during the peak retail period.
- Strategic Decisions Raise Concerns: Investments in marketing and promotional activity raised possible questions about long-term profitability.
The Technical Picture for KGN
Kogan’s share price has been volatile, with several promising rallies failing to gain traction over the last two years. More recently, KGN appeared to be building an upward trend, trading above rising 50- and 100-day moving averages since November.
However, this week’s sharp decline highlights that nothing is certain. The stock has now fallen below its 100-day moving average, a cautionary sign for investors. While buying the dip can be effective in established uptrends, caution is warranted when prices drop below key moving averages, as the risk of further declines can increase.
Coronado Global Resources Inc (ASX: CRN)
Coronado’s quarterly update this week triggered a significant market reaction, with the company’s results falling short of expectations. This has compounded broader challenges facing the coal mining industry.
Key Updates:
- Quarterly Update Disappointment: Despite some improved performance, Coronado’s quarterly results generally missed market expectations, leading to a sharp sell-off.
- Share Price Decline: The stock fell 6.5% on January 24, hitting a 52-week low of 66.5 cents.
- Industry Headwinds: Concerns over the long-term demand for coal and regulatory pressures are likely weighing on investor sentiment, despite one prominent brokerage maintaining an outperform rating.
The Technical Picture for CRN
Coronado’s shares have been locked in a persistent downtrend for the past 12 months, consistently trading below declining 50- and 100-day moving averages. Professional investors often avoid buying into weak technical structures due to the elevated risk of lower prices.
Instead of persisting with underperforming stocks, many successful investors use stop-loss strategies to limit losses and free up capital for higher-probability opportunities.
Key Takeaways for Investors
- Avoid Catching Falling Knives: Stocks like CRN in long-term downtrends and trading below declining moving averages carry elevated risk. Waiting for signs of a technical turnaround can help minimise the risk of losses.
- Monitor Key Moving Averages: Kogan’s break below its 100-day moving average underscores the importance of using technical indicators to help guide investment decisions.
- Use Risk Management Strategies: Spreading risk across a diversified portfolio and setting predefined exit points (stop-losses) can help protect against unexpected declines.
Final Thoughts
While Kogan’s recent rally hinted at a potential turnaround, its reversal underscores the need for risk management strategies when trades don’t go to plan. Coronado’s persistent downtrend and industry challenges serve as a reminder of the risks associated with trading against a falling trend.
At Motion Trader, we specialise in systematic, rules-based strategies that help investors identify high-probability opportunities while minimising risk. By focusing on stocks in uptrends and employing disciplined exit strategies, you can navigate challenging markets with confidence.
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Jason McIntosh | Founder, Motion Trader
Jason’s professional trading career began over 3 decades ago. He’s a founder of two stock advisory firms, a listed funds management business, and has helped thousands of investors navigate the stock market. Click here to read Jason’s incredible story of, at age 20, sitting alongside some of the world’s greatest traders (and the life changing experience that came with that).
Meet Jason
I'm Jason McIntosh, the creator of Motion Trader. My career began in 1991 on the trading floor at Bankers Trust. Nowadays, I trade my own systems from home in Sydney.
Motion Trader is for investors who value robust analysis, data driven entry and exit signals, commentary, and education. I use engineered algorithms to identify when to buy and sell ASX stocks. No biases or guesswork, just data driven signals.