Mad Paws (ASX:MPA) looks like it is immune to inflation, so why are investors still deaf to its story?

What’s not to like about Mad Paws (ASX:MPA)? It is one of the few ASX stocks with exposure to the pet market and is seemingly immune to inflation – at least, if today’s trading update is anything to go by.

So, why is it down over 50% since its IPO and hardly budged today?

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Mad Paws releases a solid trading update

As FY23 draws to a close, Mad Paws released a trading update. It is expecting $24.5-$24.5m which would be up 146% on a reported basis and up 60% on a pro forma basis.

Whilst so many other consumer facing stocks are reporting downgrades left right and centre as consumers cut back their spending, Mad Paws is going in the opposite direction.

So why are investors seemingly tone deaf to this company? It is down over 50% since its IPO.

Mad Paws (ASX:MPA) share price chart, log scale (Source: TradingView)

Top line good, but the bottom line…not so much

Without giving specific details, Mad Paws boasted that it had seen continued improvement in EBITDA margins and was on track for EBITDA positivity in Q1 of FY24.

Investors seemingly are in the mindset of Charlie Munger.

Not a word was said about (proper) profitability.

Still, Mad Paws told shareholders there was a lot to look forward to. In particular, it boasted about plans to expand its Pet Chemist range and a new website. When (or indeed if) it will make any difference to the bottom line is anyone’s guess.

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