Investors in price-comparison firm Moneysupermarket.com (MONY) were far from 'money calm' on Thursday, sending its shares crashing 12% to 341p and wiping out three months of steady gains after it reported a 5% drop in revenues at its Money unit in the third quarter due to a lack of attractive offers.
Money is the firm’s second-biggest revenue source after Insurance, accounting for over 20% of turnover, and the outlook is for trading to continue to weaken. The unit had delivered growth of 5% in the first half so the reversal is surprising.
Growth in the core Insurance unit, which accounts for 50% of revenues, was also weak in the third quarter up just 3% continuing the trend seen in the first half of the year. The firm blamed ‘a subdued premium environment’ for the lack of growth.
On a brighter note Home Services, which offers price comparisons between energy suppliers and broadband providers, saw a big jump in revenues, up 21%. However this was markedly slower than the 52% growth registered in the first half.
Overall, revenues across the group grew by just 4% in the quarter to the end of September compared with 15% in the six months to the end of June.
Liberum analyst Harry Read called today's share-price reaction ‘somewhat overdone’ and pinned the slowdown on a weaker trading backdrop rather than issues specific to the firm.
Read also pointed to the Financial Conduct Authority’s recent interim review on dual pricing in areas like car and home insurance, which could spur an increase in switching.