UK-based e-commerce platform, THG, reportedly recorded a £1.85 billion drop in its market value as its proposed plan to win investor support backfired after it sparked a mass share sell-off that essentially wiped approximately a third of its share price.
Formerly called, The Hut Group, the Matt Moulding-led THG held a capital markets day, where the retailer shared its 2030 sustainability strategy with investors. However, investors were alarmed at the update and concerns regarding the cooling of support from Japanese investment giant SoftBank.
This led to a decline of almost 35% in the company’s share price from the closing price of 437 pence on Monday, 11th October 2021, to close at a price of 285 pence on Tuesday. The slide took the company’s market value down to £3.48 billion from a value of £5.33 billion at the start of the day.
For the uninitiated, THG’s share price recorded a fall of more than 50% over the past month, since the company unveiled its results for the first half of 2021 and announced plans for the separation of its Ingenuity technology division from its nutrition and beauty divisions.
Previously described as a international retail technology platform, THG Ingenuity played a major role in attracting investment from SoftBank, the Japanese investment giant, in May 2021. The company entered into a JV with SoftBank, resulting in the technology division being valued at £4.5 billion, which is higher than the revenue of the entire business post Tuesday’s decline in share price.
For the record, THG first floated on the LSE (London Stock Exchange) in the month of September 2020, with an offer price of 500 pence a share, valuing the company at £4.5 billion.
The Manchester-headquartered online retailer owns an array of nutrition and beauty brands including Myprotein and Lookfantastic. In the following years, the company intends to expand its role as a technology provider, supporting brands like Danone and Unilever in directly selling their products to customers.