The founder of THG has hit out at London’s public market in spectacular style amid a private equity takeover approach and widening losses.
Matt Moulding took to LinkedIn to quote Alanis Morrisette, share a company video – which featured the Wolf of Wall Street, American Psycho and negative newspaper headlines about his company – and claim that CEOs of several listed companies had contacted him to share their “war stories”.
On Monday THG’s share price shot up 45% to 95.8p following a “highly preliminary and non-binding indicative proposal” approach to buy the company from private equity group Apollo.
However a subsequent annual report revealed that pre-tax losses at the company almost tripled in the year to 31st March 2023 to £550 million, while sales rose 2.7% to £2.2 billion.
That has seen the share price boomerang back to 77p at the time of writing.
In 2020 the Manchester-headquartered eCommerce giant floated on the stock market to much fanfare at a share price of 500p and embarked on a strategy of aggressive acquisition.
However Moulding began to receive criticism from investors and the media alike over the fact that he operated as both CEO and executive chair. He was also criticised for holding a ‘golden share’ which potentially allowed him to block a hostile takeover.
Things reached a nadir in 2021 when THG held a capital markets day, which turned into a PR and financial disaster and the company’s share price bombed. Not even the fact that Moulding gave up his ‘special share’ rights and beefed up the corporate governance could stem the flood of negative stories.
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He said on Tuesday that underlying profits was “not where we planned at the start of the year… largely the result of our strategy to minimise the impact of inflation upon our customer base”.
Sales at its Ingenuity retail technology platform, which has been repositioned, dropped 10% in the first quarter of its new financial year. Total group revenue was down by almost 9%.
“In the words of Alanis Morissette ‘Isn’t it ironic’,” Moulding, who recently posted that THG’s treatment on the LSE fuelled its startup spirit, wrote on LinkedIn.
“It’s sadly become standard practice for a select few within the world of hedge funds, media and bank analysts to regularly build negative coverage against UK listed companies, including THG.
“The purpose of ‘the game’ is simple: bet that a share price will fall, and make sure you win the bet by doing everything possible to discredit the company.
“The more aggressive the claims & actions against a company, the bigger the share price impact. Strange work, I know, but it pays big. And if you repeat it time and again, against a plethora of UK listed companies, then the rewards are mind-boggling.”
The video in the post was put together for THG’s 2022 staff Christmas presentation, he said, drawing heavily on Wolf of Wall Street. It opens with the line: “You are lower than pond scum.”
“This repetitive pattern across the LSE explains why there are minimal pension or institutional funds investing in the LSE,” Moulding continued. “In simple terms, the UK market has suffered from years of ‘over-fishing’, where small groups of industry professionals come together to try and damage UK businesses, and their share prices.
“Nobody tells you about this when joining the LSE, but it finds you soon enough. The number of CEOs of other listed companies that have reached out to me since THG joined the LSE is remarkable. Each wanting to share their war stories.”
He said the increasing flurry of companies leaving London, with boards speaking out about the state of the market, is now bringing attention to the problem. “You know things must be serious when some boards are even daring to publicly speak out about it while still listed on the LSE, something that would have stirred an angry response as recently as last year.”
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He concluded: “Many in the City are blaming pension funds for the state of the UK market, calling on the government to start forcing pension funds to pump hundreds of billions into UK listed shares, instead of overseas investments.
“This is wild. Pension funds are run for the benefit of those who have made sacrifices throughout their lives, saving for their retirement. Pension trustees have a legal responsibility to deliver the best returns for pension holders – it’s their money after all. If they believed the LSE to be the best place to invest, then they would be doing it now, like they did 30 yrs ago.
“Forcing the UK public to bail out the UK market can’t be a credible solution, and won’t end well. Pensions will deliver much worse returns, negatively impacting the lives of the average Briton. Surely we need to address the overfishing problem first?
“The past 48 hours have been ironic. A recent negative press against THG & me has had dramatically the opposite effect than intended. A throw-away line in an otherwise typically wildly inaccurate press piece, resulted in a share price spike and an obligation to make an announcement, culminating in a c.45% increase in the share price on the day. Ouch!”