Market snapshot: Nvidia makes record high but Moonpig slumps

Once again the US has run the risk of causing more self-inflicted and to an extent unnecessary confusion.

President Trump's latest salvo is aimed once more at the Federal Reserve Chair, casting further doubts as to the latter’s future, let alone the independence of the central bank. These jitters resulted in another round of dollar selling, in addition to the impending tariff renewals clouding growth prospects, in what might otherwise have been a more positive day across the main indices.

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The current ceasefire in the Middle East may be on shaky ground but while it holds it has removed a plank of uncertainty, and investors have reacted positively, notwithstanding the President’s latest Fed outburst.

Mega cap technology stocks gained in a volatile session, with NVIDIA Corp (NASDAQ:NVDA) hitting a record high and strength being seen elsewhere in the likes of Alphabet Inc Class A (NASDAQ:GOOGL). Despite all the noise, both the S&P500 and Nasdaq are now around 1% from their own record highs, with gains of 3.6% and 3.4% in the year to date, while the more traditional Dow Jones is 1% ahead.

Elsewhere, the FTSE100 continued its own quiet progress. A further rise in the gold price and a tentative return to more of a risk-on approach lifted mining stocks, while the banks for the most part resumed their recent recovery. A broker downgrade weighed on Melrose Industries (LSE:MRO), although Entain (LSE:ENT) was lifted by a positive note of its own.

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The measured gains for both major UK indices leave the FTSE100 and FTSE250 ahead by 6.7% and 3.5% respectively in the year to date as they continue to show their mettle as safe harbour investments in times of global unpredictability.

Moonpig

The patent disappointment of a significant write down has completely overshadowed an otherwise robust set of results from Moonpig Group Ordinary Shares (LSE:MOON) amid a crowded marketplace.

The numbers are a little noisy, with a £56.7 million non-cash goodwill impairment charge for the Experiences proposition (Red Letter Days, Buyagift) all but wiping out reported profits.

This aside, the picture is rather brighter, with adjusted pre-tax profit for the year to 30 April rising by 16% to £67.5 million. Revenues were in line with the group’s guided range and up by 2% to £350.1 million, underpinned by growth of 8.6% in its eponymous Moonpig offering. Although coming from a low base, Moonpig’s revenue across the US, Australia and Ireland spiked 36%, with the group’s innovative personalisation features increasingly proving something of a hit with consumers.

Moonpig has three core drivers to growth, namely more active customers (an increase from 11.5 million to 12 million), higher purchase frequency (orders grew by 4.1%) and rising average order value (up by 2.1% in the period), with the latter particularly seeing the benefit of the gift attachment option.

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There is little doubt that this is a market where there is significant room for growth and Moonpig has a dominant position in both the UK and the Netherlands, but it is also one which is extremely competitive. The group’s capital light business model has served it well, allowing Moonpig to scale more efficiently while also using its strong cash flow to invest in technology in an effort to keep ahead of the field. This cash flow has also enabled higher shareholder returns, with an increase to the dividend giving a projected yield of 1.2% being overshadowed by a new £60 million share buyback, with the previous £25 million programme now complete.

The share price has reacted positively to the progress over recent times, with a rise of 54% over the last year as compared to a gain of 5% for the wider FTSE250, and of 86% over the last two years. That being said, since the pandemic high of June 2021 the shares have halved as customer habits have reverted back to a more normal approach.

The group is maintaining an upbeat outlook on guidance, but the Experiences write down has taken centre stage with the shares falling sharply at the open. The exit of the CEO is not an immediate concern, but generally hopes have been slightly dashed with these results and the market consensus of the shares as a buy could now come under some downward pressure.