THG PLC (LSE:THG) didn’t let sleeping dogs lie, rather its share promotion event evidently poked the dog, until the dog bit some £1.8bn off the e-commerce firm’s market value.
After seeing its price drop some 35% in the wake of the ‘capital markets day’ presentation at the London Stock Exchange on Tuesday afternoon, the company this morning said it knows of no notifiable reason for the material share price movement.
No material new information was disclosed at the event, it added in a stock market statement.
No material new information may, in some ways, in fact explain the sharp decline in THG’s price.
According to anecdote and broker commentary around THG’s biggest share price drop since its 2020 IPO, chief executive Matt Moulding failed to reassure investors, didn’t address concerns and left analysts with more questions than answers.
The price action tells its own story.
Meanwhile, Moulding had described the Capital Markets Day event – ordinarily an opportunity for CEO’s to wow institutions and promote their shares – as a ‘teach in’ intended to explain the workings of THG’s Ingenuity e-commerce platform.
To explain, THG came to market with a two-pronged business: an online retail operation which includes its own brands such as ‘My Protein’ and a group of beauty and grooming brands, and, separately, the Ingenuity unit which is positioned as its technology arm, designed to essentially be an e-commerce intermediary for third-party sellers to execute digital sales.
The gameplan at THG was to spin-off the product-retailing aspects of the business to focus on the e-commerce platform, as a technology partner to third-party brands. Plans are already afoot for THG Beauty to float on an exchange in its own right next year.
Ingenuity was backed in a high-profile deal with tech investor SoftBank that potentially valued the e-commerce platform at some £4.5bn.
In the aftermath of the Tuesday’s investor event it was reported that the company had said that SoftBank would not be exercising its option early to buy a 20% in THG Ingenuity, and that was among the possible triggers suggested for the sharp share price fall, as it raised fresh uncertainties about how the tech business may be funded in the future.
According to the Guardian, analysts had also anticipated some further information from THG regarding any of the major clients using Ingenuity to support the business case for the unit.
In a note published on Wednesday, analysts at JP Morgan noted that THG did reveal that clients, including one division of Coca-Cola, Homebase and Revolution Beauty, have grown their businesses using the platform but noted that ‘satisfying additional data’ was lacking.
“Despite the additional disclosure during the session, we believe the company missed the opportunity to present satisfying additional stats and the detailed disclosure the investor community was hoping for – with a corresponding share price reaction," the JPM analysts said.
In London, THG shares were down 1.47% in Wednesday’s early deals, changing hands at 282.4p, down some 35% from the closing price on Monday.