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Stocks of a British e-commerce company backed by Softbank are plummeting

The Hut Group founder and CEO Matthew Molding (R) will guide British Prime Minister Boris Johnson (L) on a visit to the Fulfillment Center in Warrington, northwestern United Kingdom, on December 10, 2019.

Benstan sole | Pool | AFP via Getty Images

London — UK e-commerce company THG He said he knew there was “no reason to be notified” that Tuesday’s share price fell 35%.

NS Companies supported by SoftbankStocks plunged suddenly during a late afternoon trading, recording the worst one-day performance since listing on the London Stock Exchange last September.

The move continued on the day of the company’s capital markets, which began to reassure investors and analysts that THG could turn things around, with stocks declining 65% from the turn of the year.

In his presentation, CEO and founder Matt Molding blamed shortsellers for the purpose of alleviating concerns and explaining THG’s Ingenuity sales platform, but analysts were disappointed.

In a statement to the market on Wednesday, THG added that “no significant new information was disclosed at the event.”

“Since the IPO in September 2020, THG has consistently exceeded the targets set at the time of the IPO, and recently reported good results in the first half of all sectors, with Group revenue of $ 958.8 million (13). It was $ 110 million), up 44.7% annually.-Year-on-year. “

“The Group also has a very strong liquidity position during the peak trading season, with £ 700 million of cash available across its 3-5 year long-term facility as of September 30, 2021. “

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Capital Markets Day aims to help analysts and investors better understand certain aspects of the business, but according to Russ Mould, investment director of UK online brokerage firm AJ Bell, THG The effort was “stunning for the wrong reason.”

“Attendees didn’t seem to get the level of information they wanted, and the message was immediately fed back to headquarters and dumped,” Mold said.

“With many fanfares entering the stock market, the market now seems to think that THG is significantly overvalued and that splitting the business raises more questions than answers.”

Formerly known as The Hut Group, THG sells vitamins, nutrition and beauty products, operates brands such as MyProtein, Lookfantastic and Mankind, and licenses out its technology. An IPO of 500 pence per share was one of the largest technology floats in 2020.

The group’s stock has skyrocketed since it spun off its beauty business in September and announced plans to focus on THG Ingenuity, an e-commerce platform that handles web sales and logistics for companies to sell their products directly to consumers. Did.

SB Management, a division of Japanese tech giants SoftbankAnnounced in May that it would invest $ 1.6 billion in Ingenuity to acquire a 19.9% ​​stake and at the same time acquire a $ 730 million stake in THG itself.

“Difficulty for investors”

THG’s share price first began to rebound on Wednesday, then fell by more than 10% and fell 4.6% by late morning. Mold suggested that Tuesday’s post-free fall assessment presents a “difficulty for investors.”

“On the other hand, sentiment against stock prices is very weak, and if the market decides that THG is unexploded, there is no point in going against the flow,” he said.

“On the other hand, investors are now given the opportunity to soar their stocks at prices where the original source of excitement is essentially free.”

THG Ingenuity initially caused a great deal of excitement, with major clients such as Nestlé and Unilever providing great confidence to investors.

Mold suggested that many product manufacturers now want direct sales services. This means that the business growth outlook is theoretically strong.

Softbank’s buying options valued the Ingenuity division at £ 4.6 billion at current exchange rates, but Mold emphasized that Wednesday morning’s share price valued the entire group at around £ 3.15 billion. ..

Mr. Mold said this effectively means that investors can buy beauty and nutrition businesses while acquiring the technology and logistics offerings for “nothing”. However, there remains a big question as to what each business will look like as an independent entity in terms of cost base, capital investment and cash flow.

“THG has been criticized for not being open enough about financial collapse, as it is very difficult to properly evaluate the business without the right information until we start providing some answers,” he said. , Stocks may continue to be under pressure. “

Stocks of a British e-commerce company backed by Softbank are plummeting

Source link Stocks of a British e-commerce company backed by Softbank are plummeting

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