Shares in THG have plunged to an all-time low this morning on the news that its largest institutional shareholder Blackrock sold half of its stake in the ecommerce group after a tumultuous month.
Blackrock has sold 58m shares in THG at a price of 195p each, valuing the deal at £113.1m, according to its bookrunner Goldman Sachs. This represents a 10.3 per cent discount on Monday’s closing share price.
As of mid-October, the world’s largest asset manager held a 10.1 per cent stake in THG, or nearly 124m shares, according to Refinitiv data.
Shares in THG, formerly The Hut Group, fell to a record low of 198p in early trading on the news, and were down 7 per cent at 202p later in the morning.
This marks a significant drop from its 500p a share price at IPO in September last year, and the subsequent rally the group enjoyed that pushed its stock up to almost 800p.
THG is “losing fans at an incredibly rapid rate,” said Russ Mould, investment director at AJ Bell.
“Asset managers rarely sell after a stock has already fallen so much unless they’ve lost all confidence in the business and/or found something that completely changes the investment case,” Mould said.
“The backlash against THG seems to centre on the fact that people bought into the hype without paying attention to valuation. Now that difficult questions are being asked about costs and more, particularly if the business is broken up into three as per the suggestion from THG, investors aren’t getting the answers they want – or they are not liking what they see.”
It comes after THG’s founder Matthew Moulding made a series of moves to rebuild investor trust over the last couple of weeks, after a shareholder presentation at the beginning of October backfired and caused the group to lose a third of its value.
First, Moulding ditched his controversial “golden share” in the company, which owns brands such as Lookfantastic
Matthew Moulding, the founder of The Hut Group (THG), is poised to ditch his controversial “golden share” in the company in a bid to regain investor confidence after a shareholder presentation backfired last week and caused the group to lose a third of its value.
Shares in UK e-commerce business THG, which owns brands such as Lookfantastic, Cult Beauty and Zavvi, nosedived as much as 36 per cent last week after investors were left disappointed by a “capital markets day” meeting Moulding held on Tuesday.
Blackrock and THG have been contacted for comment.