Shares in price comparison giant Moneysupermarket.com (LSE: MONY) and mobile payment specialist Monitise (LSE: MONI) both fell sharply this morning — but for quite different reasons.
After markets closed yesterday, Moneysupermarket.com announced that the firm’s founder, Simon Nixon, was planning to sell 35 million shares in the firm, reducing his 17% stake by 6.4%.
When markets opened this morning, Moneysupermarket.com’s share price fell by around 5%. However, in a bizarre U-turn 16 minutes after trading started, Citigroup Global Markets, the broker charged with placing Mr Nixon’s shares, announced that the sale would no longer be going ahead, as Mr Nixon had “decided not to proceed”.
Did Mr Nixon’s proposed sale meet opposition from major institutional investors, or were potential buyers of his stock unwilling to pay the asking price?
We’ll probably never know, but in my view this might not be a bad time for investors to lock in some profits on Moneysupermarket.com. The firm’s stock trades on a forecast P/E of 21, but growth is expected to slow this year, and I believe there may be better opportunities elsewhere.
What about Monitise?
One potential opportunity for growth investors is Monitise, which announced this morning that its strategic review had been completed and that the firm was no longer for sale.
The news sent the firm’s share price down by around 15%, to 15p. For existing shareholders this will be a disappointment, but it could also be a buying opportunity.
Monitise has decided to focus on building a future as an independent player in the digital money sector. The firm’s founder, Alastair Lukies, will step down as co-CEO and the company will tighten its focus on core products and cost control.
Monitise reiterated its target for profitability — based on earnings before interest, tax, depreciation and amortisation (EBITDA) — in 2016, and believes its current cash balance, which was £129m at the end of 2014, will be sufficient to fund it through to this point.
However, there was one key change to Monitise’s previous guidance. Monitise was targeting 200m users by 2018, but the firm has now dropped this date, saying that as this target is dependent on ““partner-led product and service roll outs”, timing guidance is no longer appropriate.
Is Monitise a buy?
The mobile money sector has the potential to become very important, in my view: Monitise could be a good way to play this story, especially after today’s falls.