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Luxury Marketplace Cettire Faces Stock Downgrade Amid Tax Controversy

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A recent downgrade from Bell Potter has caused shares of luxury marketplace Cettire to plummet by 16%, with the house broker withdrawing its recommendation to buy shares in the company.

The market capitalization of Cettire has been dwindling following concerns raised by The Australian Financial Review regarding the company’s tax payments in Australia and the United States, its major markets.

Amidst rising scrutiny, anonymous sources have alleged that Cettire may not be properly registered to fulfill its tax obligations, intensifying the pressure on the ASX-listed firm.

Post market close on Thursday, Bell Potter’s Chami Ratnapala revised her rating on Cettire from ‘buy’ to ‘hold’, in addition to reducing the 12-month share price forecast to $4.50 from $4.80.

Ratnapala highlighted the challenges Cettire might face in delivering earnings beats and noted the potential delay in the company’s China market progression to the 2025 financial year.

Cettire has vehemently denied any tax irregularities, stating it is fully registered for sales tax in the states where it believes registration obligations exist.

The company, operating on a drop-shipping model, offers luxury brands like Burbury, Prada, Zimmermann, and Jimmy Choo, despite holding no inventory and having limited staff.

Alongside Bell Potter, RBC Capital Markets, Barrenjoey, and E&P are among the major brokers covering Cettire, each with varying ratings and price targets.

Following the Bell Potter downgrade, Cettire shares plummeted by 15.8% on the subsequent trading day, closing at $3.41.

Other high-growth stocks like Temple & Webster Group also witnessed declines, despite a notable increase of around 120% in the past year.

E&P’s Julian Mulcahy has been a prominent supporter of Cettire amidst the recent negative press, emphasizing the company’s resilience in the face of unwarranted scrutiny.

Rachel Adams

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