Allegro.eu (ALEP.WA): Downgrade to Neutral post outperformance

Research evidence excerpt

Allegro.eu (ALEP.WA): Downgrade to Neutral post outperformance

Goldman Sachs Allegro.eu (ALEP.WA)

Key upside/downside risks to our Neutral rating and price target:

n Stronger/weaker-than-expected e-commerce growth in Poland: Slower/higher

digital penetration, deteriorated/improved infrastructure, and higher/lower

consumer adoption, especially in under-indexed categories like Health, Fashion, and

Groceries, could pose an upside/downside risk to our GMV growth estimates. A

stronger/weaker macro backdrop across Allegro’s markets could also

improve/deteriorate discretionary spending and e-commerce demand.

n Better/worse-than-expected logistics cost efficiencies: If Allegro scales its own

logistics network faster/slower than anticipated, decreasing/increasing reliance on

third-party providers (notably InPost) and achieving better/worse unit economics,

this could ease/worsen cost pressures and increase/decrease margins. A more/less

favorable pricing renegotiation with InPost could also decrease/increase the cost of

delivery pressure, posing upside/downside risks to profitability.

n Lower/higher-than-expected competitive intensity from Chinese marketplaces:

If Temu and other Chinese marketplaces scale unsustainably/sustainably in Poland

and international markets, Allegro may face lower/higher pressure to maintain

elevated marketing spend. Any signs of Temu’s decelerating/accelerating user

acquisition, facing/overcoming regulatory hurdles, or consumer

deterioration/improvement with its model could ease/heighten structural ad cost

inflation, improving/deteriorating Allegro’s margin trajectory.

n Optimized/inefficient capital allocation: A higher/lower-than-expected return of

excess cash to shareholders, particularly affecting additional buybacks, or