Shares in e-commerce group, The Hut Group (LSE: THG) plummeted by 35% or so yesterday. The latest sell-off camme after management presented to investors at a capital markets day.
On Tuesday, The Hut Group claimed to be under a ‘short attack’ from hedge funds hoping its shares would fall.
One major shareholder is reported to have said afterwards that they’d wanted “greater visibility over cross charges between the beauty and nutrition businesses and Ingenuity at the capital markets day, which [management] failed to provide.”
Other issues facing The Hut Group
The company’s shares had already been sliding after initially doing well post-IPO. Questions have arisen over the value of its technology, especially the Ingenuity part, which Softbank has taken an option over. SoftBank invested $730m in The Hut Group’s shares in May this year. That deal gave it an option to buy a 19.9% stake in THG Ingenuity for $1.6bn within 15 months.
The latest presentation and share price fall comes after an increase in short selling activity. For instance, Switzerland’s Psquared Asset Management has bet against the shares of The Hut Group.
The Hut Group has also signalled its intention to list its beauty division separately in 2022, and could also pursue stock market listings for its other main businesses in nutrition, and technology and logistics.
Management has identified that it needs to better communicate the value of Ingenuity, the logistics technology part, to investors.
Andy Ross owns no share mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.