Moonpig shares suffer worst slump despite revenue doubling during COVID lockdowns

Moonpig, the online greeting card and gift retailer, has suffered its worst intraday share price slump despite reporting a doubling of annual revenue thanks to lockdown restrictions on shoppers.

While high street rivals were forced into hibernation due to the COVID-19 crisis, the company benefited from almost 51 million transactions as customers flocked to mark birthdays and other milestones during the year to the end of April.

Moonpig said its results – the first since a successful stock market debut in February – reflected investment in online services including its app.

It reported revenue of £368.2m over the 12 months, up 113% on the previous year, and adjusted core earnings of £92.1m – 107% higher.

Pre-tax profits were just 3% up at £32.9m – largely a result of one-off costs associated with the flotation.

Chief executive Nickyl Raithatha said of the performance: “In the past year we have delivered an enduring transformation and step-change in the scale of our business.

“The long-term growth opportunity remains vast, with the majority of the card and gifting market still offline, and we have never been in a better position to capture this growth.”

Moonpig upgraded expectations for its current financial year but said it expected group revenue to be about £250m to £260m – down by more than £100m.

The company said of the pandemic’s effect: “As restrictions have eased, we have seen customer purchase frequency start to normalise from elevated levels, and we expect this to continue in line with previous expectations.

“Despite this trading headwind, and the annualisation of the large cohort of new customers acquired during lockdown, we now expect revenue to be between 45% to 50% higher than in (pre-pandemic) FY20.”

Shares, which were listed at an offer price of 350 pence, were trading 3.5% higher at 439p in early trading on Tuesday but later slipped sharply, falling as much as 10%.

It represented the steepest daily fall for the stock since the Initial Public Offering.

Market analysts said it reflected continued high marketing spend and, in particular, the anticipated fall in revenue.

Zoe Mills, senior retail analyst at GlobalData, said: ” This is to be expected as some shoppers revert back to bricks-and-mortar players.

“Features such as reminders, of which 50 million were set as of 30 April 2021, will support customer retention and Moonpig must continue to invest in both its mobile app and website to further improve convenience.

“Moonpig’s future looks promising, with strong investment and the pandemic acting as a tailwind for its success,” she concluded.