Moonpig illustrates the harsh limits of human foresight. The UK online retailer listed a little over a year ago when high streets were shuttered by the pandemic. These were boom times for the market newbie. Demand for its personalised greetings cards and gifts was brisk and last year’s revenues hit £368.2mn.
Unfortunately those benefits had a shorter shelf life than a cheesy birthday card. Sales this year would fall to around £300mn, Moonpig warned on Tuesday, albeit that the figure exceeds December guidance.
The company expects underlying revenue to grow in mid-teen percentages in the medium term. Adjusted ebitda margins will stay in a range of 24-25 per cent over the same period, hopefully.
To achieve this, Moonpig is banking on a continuing trend towards online sales and the scope it affords for personalisation. The business, whose quirky moniker duplicates the school nickname of founder Nick Jenkins, pioneered the UK sale of personalised greetings cards that customers could order online. It hopes to lead a European shift towards buying birthday, anniversary or other occasion cards via the internet.
Investors demur. Moonpig’s warning triggered a drop of around 17 per cent in its shares, which are now a third lower than last year’s IPO price. Undercutting its promise of a brave new world of online greetings, Moonpig shares trade only a whisker above its bricks-and-mortar nemesis, Card Factory, on around 21 times forward earnings. Popping out to buy a birthday card is still a thing, it seems.
Investors’ caution partly reflects broader market fears: a cost of living crisis and inflation do not lend themselves to marking every birth, anniversary and other occasion with a personalised card through the post.
Moonpig may yet prove to be correct that pandemic trends have accelerated new buying habits. To its credit, it has an established business model that it has already managed to scale. It has two profitable years under its belt. But the business still remains a bold bet. It could use a big good luck card too.