Hut Group shares continue to slide despite company claims there is ‘no reason’ for sell-off and liquidity is ‘very strong’
- The online retailer’s share price continues to fall into the second day
- THG’s insurance policies follow that of CEO Matt Molding yesterday afternoon
The Hut Group insists it has “no reason” for the substantial price drop it suffered yesterday, with the online retailer reassuring investors of its “very strong liquidity position”.
While the stock’s decline continued today with another 3 percent drop, shareholders saw a 60 percent loss in early September, peaking at 684p.
Hut Group shares plunged 35 percent on Tuesday after a shareholders’ meeting, wiping out £2bn of the company’s market cap.
CEO Matt Molding told the Mail yesterday it was ‘not a great day’
The meeting, designed to reassure investors after a wave of negative commentary and to explain the value of the group’s online retail platform, had the opposite effect.
The stock’s price appreciation began when CEO Matt Molding began speaking. Molding told the Mail yesterday that it was ‘not a great day’ for himself from THG.
The CEO of the Manchester-based clothing, makeup and protein drink retailer added that he didn’t know “the full answers” as to why the stock price had taken such a hit, and he planned to talk to brokers later that day. to talk.
Molding suggested the company was being targeted by short-sellers betting against the stock.
He also highlighted an “attack on the company ten days ago” by research firm The Analyst that raised doubts about Ingenuity, as well as THG’s culture and corporate governance.
The THG share price has suffered since the IPO
THG followed up on Molding’s comments Wednesday morning by telling investors “it has no apparent reason for the stock’s material price movement.”
Highlighting the strength of its performance since its September 2020 IPO, THG said it has “a very strong liquidity position as it enters its peak trading season.”
The company will report its third quarter trading update on October 26.
The Hut Group: rise and fall
The Hut Group was the stock market’s darling when it listed in September last year.
It was the biggest debut in London since the Royal Mail in 2013, rising 25 percent from the 500 pence offer price on day one.
But shares began to slide five weeks ago amid rumors that boss Matt Molding wanted to split the group.
It was confirmed on September 16 when he outlined plans to incorporate THG Beauty as a separate company and suggested that THG Nutrition could follow suit.
Shares jumped again when a research note published Oct. 1 by The Analyst told investors to short – or bet against – the stock.
Predicting the price could drop to 260p, the note claimed that THG’s tech arm Ingenuity, which it claims is worth half the company’s value, may not live up to expectations.
It left Molding with a fight on its hands with all eyes on yesterday’s “capital markets day,” when investors get a chance to discuss a company with top management.
But it ended with The Hut Group having its worst day ever on the stock market, and more questions hung over the company.