Moneysupermarket’s hot-pants-clad businessmen have had to twerk rather more vigorously for their money of late.
The price comparison website, whose adverts promise to make consumers “feel epic”, has suffered amid a dearth of bulk switching deals — where energy giants pay it to hand over thousands of customers. It has Theresa May and Jeremy Corbyn to thank for that: politicians’ determination to cap energy prices has dented power companies’ appetite to scoop up customers en masse.
The problem shows little sign of abating, and is weighing on the shares. Moneysupermarket is down 11% since late July to 320.9p, valuing the business at £1.7bn.
The website and its rivals, such as Go Compare and uSwitch, occupy the curious digital hinterland between utility companies, banks and insurers and their customers. Founded in 1999 by Simon Nixon, an accountancy dropout, it connects consumers with a diverse array of services and owns the Moneysavingexpert advice website.
Moneysupermarket has spent a bumpy decade on the stock market, yet it still has much to go at. Research by the competition watchdog found that, while 84% of people looking for car insurance used a comparison site, just 52% of those looking for broadband visited one.
This untapped potential goes some way to explaining why its shares trade on such a rich multiple — about 19 times this year’s expected earnings. New boss Mark Lewis, the former retail director at department store chain John Lewis, who previously was a managing director at online auction site eBay, needs to deliver on this potential and expand into other areas.
Bundling together different services, such as gas, broadband and mobile, could become a lucrative new stream. Car finance, which is increasingly a lease service rather than an outright purchase, could be another.
There are, however, other worries in the background. The Competition & Markets Authority is exploring greater regulation of the sector, and demanding more transparency.
Moneysupermarket has less to worry about than some rivals, such as confused.com, which is owned by the insurer Admiral. Should the watchdog decide to tackle this obvious conflict of interest, it could spell trouble for Confused.
Despite the regulatory concerns and the energy giants’ woes, there is plenty of scope for growth at Moneysupermarket. Buy.
@jcollingridgeST
