The flotation of The Hut Group – now rechristened THG – in September last year was the biggest of 2020 on the London Stock Exchange.
At the time, it spurred a great deal of optimism, coming as it did in the middle of a period in which the UK was grappling with COVID-19.
It also raised hopes that the London stock market could be as much of a crucible for technology stocks as its counterparts in the United States and continental Europe.
Fuelling that was the fact that, despite several eyebrow-raising features about the company’s listing, the shares got off to a day one premium.
Those features included the fact that Matthew Moulding, the founder, was both chairman and chief executive of the company – an arrangement usually frowned upon in UK listed companies.
Some investors disliked an incentive scheme under which Mr Moulding stood to make as much as £700m and also the fact that he had a controversial “founder’s share” that gave him the ability to block takeover bids for the next three years.
Such arrangements are commonplace in the tech-friendly US markets but not in the UK.
For a while, Mr Moulding appeared to have seen off the sceptics.
Shares of THG, which came to market at 500p each, soared to 658p on debut and went on to hit the dizzy heights of 837.8p each in January this year.
Shortly afterwards, in May, Mr Moulding announced that Softbank, the specialist Japanese tech investor famous in this country for its takeover of chip designer Arm Holdings in late 2016, was investing $730m (£537m) as part of a $1bn (£735m) fund-raising.
That announcement was accompanied by news that Softbank had been awarded an option to buy 19.9% of THG Ingenuity, the part of THG that provides integrated ecommerce and logistics services for customers such as Gillette, Homebase and Nintendo, in an arrangement that valued Ingenuity at £4.5bn.
That option, as things stand, looks unlikely to be exercised any time soon.
Shares of THG, since peaking in January, have lost two-thirds of their value.
The entire business is now valued less than £3.5bn.
So what has gone wrong?
According to THG itself, nothing with the business itself.
It pointed out today in a stock exchange announcement that, since the flotation, it had “consistently delivered ahead of its targets set at the time of the IPO [initial public offering] and recently reported a strong first half performance across all divisions, with group revenue of £958.8m, up 44.7% year on year”.
The statement went on: “The group also has a very strong liquidity position as it enters its peak trading season, with available cash as at 30 September 2021 of £700.0m across long dated 3-5 year facilities.”
The share price tells a different story.
Some investors have clearly been rattled by trading updates from a number of other online retailers, among them AO World, Boohoo and ASOS, that have pointed to supply chain issues and labour shortages.
Analysts naturally assume THG will not have gone unaffected if its peers have been hit.
But that is only part of the explanation for the share price reverse.
The more fundamental issue is that a number of analysts and commentators have been putting parts of THG under the microscope and have not liked what they have seen.
A number of short-sellers (those investors who borrow shares in a business, sell them and then buy them back later to return to the lender after the share price has fallen) have targeted the business, arguing that it was previously over-valued by the market, being valued more as a tech company than an online retailer.
It was suggested that the valuation could not be justified in the absence of greater transparency about THG Ingenuity.
Others, who had always had it in for the company because of its unconventional approach to corporate governance, were happy to join in the selling frenzy.
In order to tackle the criticism, THG on Tuesday held a presentation to investors and analysts, who were promised more detail about THG Ingenuity.
Unfortunately for the company, the selling intensified, causing the shares to lose a third of their value on the day.
Mr Moulding himself told the Daily Mail after the share price reverse: “It has not been a great day, that’s for sure.”
THG, in its statement today, insisted it “knows of no notifiable reason for the material share price movement, and that no material new information was disclosed at the [presentation]”.
That may be the problem.
A lot of investors are still none the wiser about THG Ingenuity, for example, how much it charges clients, as well as the websites THG itself owns.
More detail in particular is sought about the global technology partnership arrangement THG Ingenuity signed in April last year with Nestlé which, at the time, was described by Mr Moulding as “a major endorsement for THG Ingenuity’s unique and comprehensive offering”.
Until more clarity is provided around some of these issues, THG is likely to remain in the doghouse with a portion of its shareholders, with wider implications for London as a location for high profile tech IPOs.
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