{"id":182269,"date":"2021-10-13T09:45:36","date_gmt":"2021-10-13T08:45:36","guid":{"rendered":"https:\/\/theindustry.beauty\/?p=182269"},"modified":"2022-01-13T09:41:58","modified_gmt":"2022-01-13T09:41:58","slug":"thg-knows-of-no-identifiable-reason-for-2bn-drop-in-its-shares","status":"publish","type":"post","link":"https:\/\/theindustry.beauty\/thg-knows-of-no-identifiable-reason-for-2bn-drop-in-its-shares\/","title":{"rendered":"THG knows of \"no identifiable reason\" for \u00a32bn drop in its shares"},"content":{"rendered":"

Online beauty retail group THG has said it is in the dark over what caused a 35% drop in its share price during a meeting with shareholders on Tuesday.<\/strong><\/p>\n

<\/p>\n

Company leaders said they had not revealed any new information that might have caused such a major swing in the embattled company\u2019s share price.\u00a0But the event, which was called to calm the nerves of shareholders, clearly had the opposite effect.<\/p>\n

Up until the point at which CEO Matt Moulding started speaking, THG\u2019s shares had been trading down just 2% on Tuesday. They plunged following his speech, closing down by more than a third.\u00a0The drop wiped nearly \u00a32 billion off its market value.<\/p>\n

On Wednesday the company said: \u201cTHG notes the fall in the share price yesterday following the capital market event, and confirms that it knows of no notifiable reason for the material share price movement,<\/strong> and that no material new information was disclosed at the event.\u201d<\/p>\n

THG said that since listing in September 2020 it has consistently delivered results ahead of targets.\u00a0It also has a \u201cvery strong liquidity position\u201d going into a peak trading season,<\/strong> THG said.<\/p>\n

But as markets opened on Wednesday morning, investors did not seem particularly calmed by the statement.\u00a0Shares yo-yoed between a 7% rise and a 10% drop in just the first half hour after trading started.<\/p>\n

The group\u2019s share price has been under pressure for months. It is just 13 months since the company\u2019s shares started trading in London at 500p each.<\/strong> They are now worth less than 300p.<\/p>\n

What was meant to set THG apart when it listed was its technology, which it was able to sell to other online retailers.\u00a0The platform, called Ingenuity, would position THG in a similar category to online supermarket Ocado, or energy supplier Octopus,<\/strong> who gained massive valuations from selling their technology to others in the sector.<\/p>\n

But investors have been unsure about what exactly Ingenuity does. This was in part what Tuesday\u2019s meeting was called to explain.\u00a0Ingenuity has been described as anything from a social media influencer platform to a platform to handle logistics.<\/p>\n

Following the share price collapse, analysts at Jefferies noted investors now seem to think Ingenuity to be of little or no value.\u00a0It is a far cry from May, when Japanese investor SoftBank signed a deal which would let it buy a fifth of Ingenuity when THG sells the unit. The agreement valued Ingenuity at \u00a34.5 billion<\/strong>.<\/p>\n

\u201cQuite clearly, the reassurance that today\u2019s event should have delivered failed to materialise. And sentiment has taken over from fundamentals,\u201d Jefferies analysts said.<\/p>\n

But they added that an update on the third quarter results, which is due on 26 October, and more clarity on the SoftBank relationship, might help turn things around.<\/strong><\/p>\n

THG is the parent of online beauty retailers Cult Beauty, Lookfantastic and Glossy Box, nutrition brand My Protein and online fashion retailer Coggles, among others.<\/p>\n","protected":false},"excerpt":{"rendered":"

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