Shares in THG slump despite revenue growth
By Rob Griffin
11:19, 26 October 2021
Shares in THG fell sharply today – despite the UK e-commerce specialist revealing a strong set of results for the third quarter.
In a statement, the technology platform reported that group revenue for the three months to the end of September 2021 had risen 38% year-on-year to £507.8m.
It also announced the process was underway to appoint an independent non-executive chair ahead of the company’s premium listing on the London Stock Exchange.
Strong trading
Chief executive Matthew Moulding said the company had delivered a “strong trading performance” in the third quarter and was entering its peak trading period with confidence.
“The recent successful migration of Cult Beauty onto the Ingenuity platform is testament to the resilience of the infrastructure and the expertise of our digital talent,” he said.
He said the migration of Cult Beauty had been achieved seamlessly in under 10 weeks, while the company delivered “significant website and customer user-experience” improvements.
Separately, the group has a “very strong liquidity position” as it enters its peak trading season, with available cash of around £700m, including long-dated three- to five-year facilities.
What is your sentiment on THG?
Share price falls
The upbeat nature of THG’s statement failed to inspire the markets, however, with the share price plummeting almost 12% to 269.8p by late morning in London.
It means that the company’s shares have fallen by 66% from the £7.95 level they had attained at the beginning of this year.
The fall was recently triggered by a disastrous capital markets day (CMD) presentation earlier this month, which resulted in the stock losing a third of its value.
Unjustified collapse
At the time, Wayne Brown, an analyst at Liberum, argued that the share price collapse was unjustified and represented a good entry point for investors.
“We believe the share price decline was a result of the CMD not doing enough to alleviate the concerns in the market,” he said.
He pointed out these worries included question marks over the long-term sustainability and scalability of revenues in its Ingenuity Commerce business.
Appointments
In the company’s statement, Moulding also said employees had achieved a lot in the 12 months since the IPO, with the workforce having grown considerably.
He also noted the appointment of two independent non-executive directors and four special advisors since IPO has been hugely beneficial to the board.
“We have real optimism for 2022 with the step-up to a premium listing on the Main Market of the London Stock Exchange following the appointment of an independent Chair,” he added.
Read more: THG chief giving up special share rights in company overhaul
The difference between stocks and CFDs
The main difference between CFD trading and stock trading is that you don’t own the underlying
stock when you trade on an individual stock CFD.
With CFDs, you never actually buy or sell the underlying asset that you’ve chosen to trade. You
can still benefit if the market moves in your favour, or make a loss if it moves against you.
However, with traditional stock trading you enter a contract to exchange the legal ownership of
the individual shares for money, and you own this equity.
CFDs are leveraged products, which means that you only need to deposit a percentage of the full
value of the CFD trade in order to open a position. But with traditional stock trading, you buy the
shares for the full amount. In the UK, there is no stamp duty on CFD trading, but there is when
you buy stocks.
CFDs attract overnight costs to hold the trades, (unless you use 1-1 leverage)
which makes them more suited to short-term trading opportunities. Stocks are more normally
bought and held for longer. You might also pay a stockbroker commission or fees when buying
and selling stocks.
Markets in this article
Related topics