When I was a young boy in the 1970s, football was still very much a community-based sport. But this proved a problem for me, because my father was in the British Army and so we moved home a lot. In fact, I didn’t support any particular English team until I was an adult. Having working-class roots and settling in London, I then became a West Ham United fan. But the most successful English club I’ve seen — led by their legendary manager Sir Alex Ferguson — was Manchester United. And I spotted on Tuesday that Manchester United (NYSE: MANU) shares had plunged to an all-time low.
Manchester United shares slump
Manchester United shares floated on the New York Stock Exchange on 10 August 2012, just short of a decade ago. Priced at $14 each, this valued the club at $2.3bn, making it the world’s most valuable soccer team. Man Utd stock then bounced around until late 2016, when it set off on a run-up to a record high. On 31 August 2018, the shares closed at $26.20 — up over 87% since listing.
However, the stock has been on a downward path almost ever since. Here’s how the shares have performed over seven different timescales (excluding dividends):
| One day | 1.8% |
| Five days | -11.6% |
| One month | -15.5% |
| Year to date | -23.0% |
| Six months | -21.5% |
| One year | -28.8% |
| Five years | -33.1% |
As you can see, Manchester United shares have fallen over all six periods ranging from five days to five years, but have rebounded a little since Tuesday’s close. Thus, in investment terms, they’ve hardly been a Premier League stock for at least half a decade.
Would I buy these shares today?
At their 52-week high in late September 2021, Man Utd shares hit an intra-day peak of $20.86. As I write on Wednesday afternoon, they trade at $10.99, just $0.48 above Tuesday’s all-time low of $10.51. So after recent steep falls, are they a bargain buy or a busted flush?
The first thing to note is that MUFC’s corporate returns are heavily influenced by club results, but it’s so much more than that. The club’s global popularity enables it to make money from multiple sources, including shirt/kit sales, merchandising, sponsorship deals, broadcasting revenue, etc.
Even so, the club’s relatively unimpressive form in recent years has impacted on its commercial income. For example, total revenue was $627m in 2018/19, versus just $494m in 2020/21. And with Man Utd finishing only sixth in the Premier League last season, yearly revenues might continue to decline. Also, new manager Erik ten Hag has admitted that he must sign several top players to turn the Red Devils’ form around.
At the current Manchester United share price ($10.99), the club is valued at $1.8bn, while the stock offers a dividend yield of 1.6% a year. Would I buy the club for this price tag? My immediate answer is no, so it follows that I would not buy these shares at their current price. To my mind, MUFC shares show little sign right now of supporting market-beating investment returns in future!