It’s the THG mystery that has baffled analysts, investors and the media alike.
How can the Manchester-headquartered eCommerce retailer deliver a stellar Q4 trading update on Tuesday morning and still see a significant share price by the close of the day?
First, a recap. At 7am on Tuesday (January 13th) THG told the London Stock Exchange that the company had ended 2025 with its strongest quarter of trading with group revenue growth up 7 per cent.
It meant that THG Group delivered FY revenue growth of 2.3 per cent, the first year of growth since 2021.
The reaction was universally positive.
Retail Gazette; Retail Week; Retail Bulletin; Insider Media; The Industry.Beauty; and City AM were among the titles to join BusinessCloud in celebrating THG’s performance.
After drinking the elixir of optimism I even posted this on LinkedIn: “The analysts are happy, the markets are happy; Mr Moulding is happy; and THG’s share price is up to 49.31p.”
Fast forward to the end of the day and Varun Sharma – who is a former THG data engineer according to his LinkedIn profile – posted the following pithy three-word reply: ‘Aged like milk’.
Undeniably unflattering but also wholly accurate after THG’s share price fell in the day nearly 9 per cent from 47.92p to 43.64p despite making early gains and even topping 50p at one point.
My LinkedIn comment wasn’t the only thing that aged badly with Proactive Financial News; TipRanks; Fool UK; and Global Cosmetic News among the online publications to focus on the early gains made by THG’s share price.
By 6pm the early morning optimism among the army of small investors in THG had been replaced by a mixture of bewilderment and anger.
One investor DM’ed me. “I would be very interested to see your thoughts at the end of today after what seemed a bullish started this morning,” he wrote. “52p to 43p is wild and quite frankly awful for THG and Matt.”
For full transparency, I’ve always admired THG’s founder and CEO Matt Moulding and the powerhouse business he co-founded in the North of Englad in 2004.
Love him or hate him, his straight-talking approach on LinkedIn is refreshing and means he’s impossible to ignore.
However, not everyone likes him. When THG – then called The Hut Group – did its IPO in 2020 the initial share price was 500p, immediately jumping to 658p.
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THG and Moulding were the poster boys of the LSE as a lot of people, made a lot of money.
What goes up, must come down
However, to quote Sir Isaac Newton, ‘what goes up, must come down’ – evidenced by THG’s current share price of 43p.
The fall meant a lot of people who invested in THG, have lost a lot of money.
Unsurprisingly, Moulding’s leadership and decision-making has come under scrutiny – which is why the company’s Q4 performance could be seen as a poke in the eye to his critics.
However, none of this explains why THG’s share price dropped so significantly on the back of a positive trading update so what happened?
“Somebody sold a chunk of shares obviously,” was the blunt response from one person I spoke to but it doesn’t address the issue of why.
Short-selling
One analyst blamed short-selling – or ‘shorting’ – which is when buyers aim to profit from a falling share price.
Could it be that THG’s share price hitting 50p was the trigger for a selling frenzy?
Short-selling isn’t new and Moulding has often criticised hedge funds who short stock, including THG’s.
THG’s 7am announcement to the LSE was followed at 9am with a standard analyst and institutional investor conference call and webcast, which people could register for.
Moulding was joined by deputy CFO Matt Rothwell and three analysts – Andrew Wade of Jefferies; Lara Simpson, of JPMorgan Chase & Co; and John Stevenson, of Peel Hunt.
Such calls are an opportunity for analysts to robustly question THG and for THG to land their message with a group of influential analysts.
I looked at the transcript of the conversation and there was nothing there that jumped out at me as being out of the ordinary.
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Moulding spoke about the impact on sales from the rising whey prices and the falling value of the Japanese yen.
Whey is a key ingredient of Myprotein and, in turn, Myprotein is key component of THG’s bottom line.
When questioned about whey prices in the conference call, Moulding said: “If whey pricing does fall considerably, then obviously, that will have a dramatic impact on return to profitability or an increase to profitability.”
VAT refund
There was also a discussion around a multi-million pound VAT windfall THG could be entitled to from HMRC depending on the outcome of an ongoing legal case over VAT payments for protein products.
Moulding told the conference call: “When we first notified the market on this last year, it was about £30m that we were due. That number is now at £55m. It’s a sizeable chunk.”
The general consensus was that the call went pretty well so why did THG’s share price take such a hit?
One of those to sell was Michael Taylor, managing director of Nitro Gains Capital. According to his LinkedIn profile he trades stocks and makes videos and is a freelance writer for the Financial Times.
He wrote: “Took advantage of the early market optimisation to sell my shares around 50p.
“Revenue is ahead but EDITDA was not, which suggests margins have fallen.
“Didn’t think the market would like that so thought it best to sell first and ask questions later.
“Still in a far better position than it was a few years ago imo.”
I also canvassed the view of some small investors in THG.
One said: “All of our eggs in the basket of (a) VAT refund and falling whey price. What happens when the whey price drops? Will our competitors then lower their prices forcing us to?”
Talk of whey prices and a possible VAT refund was a consistent theme of the investors.
Another said: “The huge worry for shareholders is Matt’s intention to take this remaining group private.”
As long ago as 2021, Moulding hinted that he might take THG private but in recent years he’s invested millions of his own money back into the business by not taking a salary.
So where does it leave us in relation to trying to explain why THG share price dropped on the back of a stellar Q4 performance?
The truth is there is no obvious answer and at 9am on Wednesday morning THG’s share price was down to 42.62p.
Who’d be the boss of a listed company?