UPDATE 2-THG sees no reason for share slump as volatility continues

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* Firm says no new material information, liquidity strong

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* Analysts say submissions got bad on Tuesday

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* Shares fell 35% on Tuesday, short-seller gains (adds background, analyst quote, updated share price)

October 13 (Businesshala) – Shares of British online retailer THG rallied 35% the previous day on Wednesday after a badly received investor presentation, even as the company said it did not know the reason for the slowdown. Was.

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THG said no new information was disclosed during the presentation and that “no notable reason” was known for the drop in the share price. It said its liquidity was strong ahead of its peak trading season, with 700 million pounds ($953 million) of cash available as of September 30.

Shares of SoftBank-backed THG, which went public in a bumper initial public offering last September, fell late Tuesday to register their worst one-day performance ever.

The stock rose 8.8% early Wednesday, before falling nearly 13%. It was last down 2.4% at 277.2 pence.

Tuesday’s presentation focused on THG’s e-commerce services business Ingenuity, a direct-to-consumer sales and logistics platform, which it sells to companies like Nestle.

Analysts said investors were disappointed by the lack of financial details about Ingenuity.

“We believe the company missed an opportunity to present satisfactory additional data and was expected to make a detailed disclosure to the investor community,” analysts at JPMorgan Kazenov said in a note.

THG said in May that it planned to spin off Ingenuity into a separate company, with SoftBank having the option of investing another $1.6 billion in Ingenuity at a business valuation of $6.3 billion.

But with the recent drop in its shares — down 65% so far this year — THG is only valued at $4.8 billion, meaning Ingenuity’s market-implied value is now close to zero.

“The market is now taking the view that THG was overpriced and that breaking up the business poses more questions than answers,” said Russ Mold, investment director at AJ Bell.

“Until it starts to respond, stocks may remain under pressure because it’s too hard to properly value this business without all the right information.”

Shares in THG, which plans to divest and list its beauty business next year, had already fallen a third in the four weeks before Tuesday, according to reports short-sellers were targeting the company.

Swiss hedge fund PSquared Asset Management AG held a short position of 12.3 million shares, or 1.01% of THG shares, as of August 24. Tuesday’s stock decline gave PSquared a potential profit of £18.7 million, according to data from financial analysis firm Ortex. .

($1 = 0.7334 pounds)

Reporting by Sachin Ravikumar in Bengaluru and Sujatha Rao-Kavaraly in London Editing by Amy Karen Daniels and Mark Potter


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