AI-Driven Marketplace Expansion Will Unlock Significant Long-Term Nordic Opportunity

Catalysts

About CDON

CDON operates an asset light Nordic online marketplace through the CDON and Fyndiq brands, connecting consumers with a broad network of third party merchants.

What are the underlying business or industry changes driving this perspective?

• Accelerated Nordic expansion from a unified, scalable marketplace platform in all four countries, combined with underpenetrated positions outside Sweden, can unlock higher GMV growth and operating leverage, which may support faster revenue growth and expanding EBITDA margins.
• Increased tech, product and data hiring to embed AI across merchandising, pricing, on site search and merchant integration may enhance conversion and order values while lowering unit costs, which could lift both net sales and GPAM margins over time.
• Reintroduced brand marketing on top of already high aided awareness for CDON and Fyndiq may convert latent brand equity into active traffic, reduce reliance on paid performance channels and improve net revenue and marketing efficiency, which could support net margin expansion.
• Retail media monetization, where merchants and brand owners pay to promote products in high intent categories such as TVs and electronics, adds a high margin revenue stream on existing traffic, which may drive GPAM growth faster than GMV and boost earnings potential.
• Onboarding larger European merchants and expanding into higher ticket categories like home electronics and adjacent verticals increases assortment depth and average order value, which can affect the pace of GMV and net sales growth and may further influence EBITDA through mix and scale effects.

Assumptions

How have these above catalysts been quantified?

• This narrative explores a more optimistic perspective on CDON compared to the consensus, based on a Fair Value that aligns with the bullish cohort of analysts.
• The bullish analysts are assuming CDON's revenue will grow by 9.6% annually over the next 3 years.
• The bullish analysts assume that profit margins will increase from -14.2% today to 2.7% in 3 years time.
• The bullish analysts expect earnings to reach SEK 16.5 million (and earnings per share of SEK 1.48) by about July 2029, up from -SEK 64.9 million today. However, there is some disagreement amongst the analysts with the more bearish ones expecting earnings as low as SEK-9.6 million.
• In order for the above numbers to justify the price target of the more bullish analyst cohort, the company would need to trade at a PE ratio of 104.1x on those 2029 earnings, up from -9.4x today. This future PE is greater than the current PE for the SE Multiline Retail industry at 30.7x.
• The bullish analysts expect the number of shares outstanding to grow by 6.65% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 6.9%, as per the Simply Wall St company report.

Risks

What could happen that would invalidate this narrative?

• CDON remains heavily dependent on paid traffic with marketing costs that have not yet trended down structurally. If competition for online ad inventory intensifies or Google and other platforms maintain high pricing power despite new AI channels, customer acquisition costs may stay elevated or rise further. This would pressure gross profit after marketing and compress net margins.
• The strategy to accelerate Nordic expansion and brand marketing assumes underpenetrated markets can be profitably captured. If consumer sentiment in the Nordics weakens or local and global rivals with larger budgets outspend CDON, the company may fail to gain meaningful share, resulting in slower GMV growth and disappointing revenue momentum.
• CDON is betting on an AI first approach and new OpenAI driven commerce channels to level the playing field with global marketplaces. If larger competitors move faster or new AI shopping interfaces bypass aggregators in favor of direct to consumer brands, CDON’s platform could lose relevance over time, limiting take rate improvements and long term earnings growth.
• The mix shift toward higher ticket home electronics and other big basket categories increases average order value but is already correlated with fewer orders and slightly lower take rates. If macro headwinds or tighter household budgets reduce demand for these items, GMV could stall while the lower volume base restricts operating leverage and EBITDA expansion.
• The business requires ongoing investment in tech resources, platform integration and category expansion including new regulated verticals like Snus. If execution is slower than planned or cost inflation in engineering and compliance outpaces efficiency gains, operating expenses may remain structurally higher, limiting improvements in operating cash flow and net profit.

Valuation

How have all the factors above been brought together to estimate a fair value?

• The assumed bullish price target for CDON is SEK101.0, which represents up to two standard deviations above the consensus price target of SEK89.25. This valuation is based on what can be assumed as the expectations of CDON's future earnings growth, profit margins and other risk factors from analysts on the bullish end of the spectrum.
• However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of SEK101.0, and the most bearish reporting a price target of just SEK77.5.
• In order for you to agree with the more bullish analyst cohort, you'd need to believe that by 2029, revenues will be SEK601.7 million, earnings will come to SEK16.5 million, and it would be trading on a PE ratio of 104.1x, assuming you use a discount rate of 6.9%.
• Given the current share price of SEK53.0, the analyst price target of SEK101.0 is 47.5% higher.
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.