The Hut Group’s crisis deepens over “loss of trust” as stock market defeats continue
The Hut Group founder Matt Molding has confirmed that his 14.2% stake has fallen by £ 701m in the last five weeks.
The city was rounded yesterday as The Hut Group and its founders tried to protect themselves in the devastation of the stock market. A disastrous presentation ran away investors, clearing £ 1.8 billion from the company’s value in just two hours on Tuesday.
Yesterday, the company, known as THG, was in crisis as analysts panned the company’s “unproven” investment cases and “loss of trust.” The stock price fell 2.9% (8.4p) to 276.6p, well below the fluctuating 500p in September 2020.
The company’s founder and executive chairman, Matt Molding, confirmed that a 14.2% stake fell £ 701m in five weeks. Yesterday’s financial adviser Numis lowered the stock price target to 230p, suggesting that the stock price would fall further. The collapse caused short-selling PSquared, which placed a 1.01% bet on stocks last week, to make a profit of around £ 45m.
In the rearguard proceedings, THG issued a statement that “there was no noticeable reason for significant stock price fluctuations and no significant new information.”
The Manchester-based group sells clothing, cosmetics and protein shakes online, highlighting recent “strong” transactions and a £ 700m cash balance.
To prevent the stock price from falling, non-executive director Damian Sanders bought £ 49,700 in shares at 297.6 pence per share. This move happened because some city analysts have now suggested that it is a good buying opportunity for investors.
Shares were squeezed after THG made a surprising announcement to spin out its beauty business and focus on its logistics platform, the “unproven” deficit business, Ingenuity.
Russ Mold, director of AJ Bell, said: On the one hand, if the market decides that THG is unexploded, there is no point in going against the flow.
“On the other hand, investors are given the opportunity to soar stocks at prices where the original source of excitement is essentially free.
THG Ingenuity was the reason why the market, a one-stop shop for web sales and logistics for brands looking to sell directly to consumers, was the first to get excited.
According to analysts’ notes, THG’s share price is “hype”, worth only 260p, and is pressured to answer the moldings as an event on Tuesday’s Capital Markets Day.
But the meeting was catastrophic, with investors rushing to the exit, dropping stock prices by 35%. Restructuring has progressed substantially one year after listing.
Numis’ Simon Bowler said: Davey’s Roland French said: “Management has lost confidence in the market.”
The Hut Group’s crisis deepens over “loss of trust” as the rout continues
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