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THG shares jump as The Analyst pulls short recommendation

·2-min read
THG CEO Matt Moulding  (Handout)
THG CEO Matt Moulding (Handout)

Beleaguered e-commerce company THG was one of the few companies to make gains on the stock market today as one of its most vocal critics pulled back.

Shares in THG, formerly The Hut Group, surged 23.1p, or 12.5%, to 213.8p after The Analyst, a private City research firm, reportedly withdrew its short recommendation. The same research house helped trigger the collapse in THG’s share price when it first published the note in October.

The withdrawal suggests The Analyst thinks the company’s share price doesn’t have any further to fall and the worst may be over.

THG’s share price has sunk over 65% since September amid concerns about governance and transparency. Investors became jittery after the company announced plans to spin-off its beauty division and focus instead on its nascent platform Ingenuity, which provides e-commerce services to other brands.

CEO Matt Moulding has sought to address City concerns by giving up his golden share, which gave him control of the business, appointing a new non-executive director and vowing to appoint an independent chair.

Moulding has blamed short sellers for the firm’s woes.

Around 1.3% of THG’s stock is on loan to short sellers, according to official disclosures, up from around 1% when The Analyst first issued its short recommendation.

On Friday, analysts at Bank of America said THG’s stock looked “just too cheap” after the recent sell-off.

“We value each of the group’s three division at a higher [enterprise value] than the overall group market cap,” the bank wrote. “We believe the listing of Beauty could act as a catalyst for the shares, while the company has done [sic] good progress when it comes to governance and transparency.”

Last week THG announced that Matalan had signed up to use its Ingenuity platform, one of the biggest wins for the division to date.

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