Investors in Moonpig (LSE:MOON) shares were squealing with delight after the online retailer of greeting cards went public on 2 February 2021. The stock price surged by 25% within just an hour of the market opening, from a float price of £3.50 to £4.40.
Now, shareholders are likely grunting in disappointment as they look at Moonpig’s share price crash over the last two years.
Pig in a poke
If I’d bought £1,000 worth of Moonpig stock the day it went public, I’d have around 280 shares.
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Today, those shares would be worth a paltry £355, representing a capital loss of 64.5%.
Despite being profitable, with a free cash flow of £45.2m in 2022, Moonpig has never paid out a dividend. That means I’d have nothing to show for my investment in aside from the massively depreciated shares.
Fortunately, I have never been a Moonpig shareholder. But given the company is trading close to its 52-week low, is currently profitable, and has fantastic brand recognition, should I buy the dip?
Making a pig’s ear of it…
Moonpig had a tough 2022.
First, the shine came off many online businesses, including Moonpig’s, when Covid shutdowns ended, allowing people to do more shopping at High Street stores.
Then, in the second half of 2022, Royal Mail launched 18 days of strikes, making it more difficult to send last-minute greetings cards for special occasions.
But what could the future hold for Moonpig?
Going the full hog
To funnel sales to its online store, Moonpig has built a data infrastructure that pings 79m reminders each year to customers about important dates – such as birthdays and anniversaries.
The reminders go out to people who have previously used Moonpig to send something to a loved one on a special date. In FY22, the company delivered 57m personalised cards, gifts, and flower bouquets in 40m unique orders. Meanwhile, around 90% of revenue in that financial year came from existing shoppers.
Those figures suggest to me that Moonpig’s reminders have an impressive conversion rate.
Sizzling statistics
I like that Moonpig has amassed a gargantuan mailing list of customers, along with the dates on which they’re likely to become repeat buyers.
But what do the financials say? Below, I compare some key financial ratios for Moonpig with those of Etsy and Card Factory.
While Moonpig and Etsy are both exclusively online retailers that specialise in personalised gifts and cards, Card Factory is primarily a brick-and-mortar retailer that offers cards, gifts, and party supplies through physical stores.
| Company | Price-to-earnings | Price-to-sales | Net debt-to-assets |
| Moonpig | 21 | 1.3 | 39% |
| Etsy | Unprofitable | 5.7 | 52% |
| Card Factory | 13 | 0.8 | 14% |
Moonpig hogs the limelight when it comes to any comparison with Etsy’s financials. But Card Factory has the last laugh, with its shares priced much more reasonably than Moongpig’s. Surprisingly, Moonpig is more leveraged than Card Factory, despite having no physical stores.
Currently, Moonpig is the sixth-most shorted stock by big money managers on the London Stock Exchange, according to data from the Financial Conduct Authority.
That suggests, for all the company’s talk about being a “technology platform at heart”, big-shot investors think it is all hogwash.
I wouldn’t buy Moonpig shares right now. I wouldn’t buy Etsy or Card Factory, either. Given the cost-of-living crisis, I see bleak times ahead for retailers of non-essentials like greeting cards, flowers, and party balloons.
