So – might this be the start of a recovery?

If so, might now be a good moment for me to consider adding the shares to my portfolio?

A growth story with limited growth lately

The company released a trading update today (13 January) and that provides some indication of the current state of the business.

Total revenue fell 2% in 2025. However, this year saw its once much-touted Ingenuity division taken private, somewhat skewing the numbers. Looking only at revenues in the continuing business, THG reported 2% year-on-year growth.

That is fine in my view, but with its digital focus, THG is often seen as a growth stock.

I don’t excited about 2% revenue growth at a growth stock, although the statement did show that revenue growth towards the end of last year was strong.

Why has the share price soared?

But while the latest trading statement did not excite me much, the THG share price has soared over the past half-year or so. Why?

Getting rid of Ingenuity, which sometimes felt like a bit of a black box, has arguably made it easier to value THG.

While the company remains loss-making, its operating loss in the first half was slightly smaller than in the prior year period, while net debt was also reduced.

At £321m at the end of June, however, it is substantial for a company that currently has a market capitalisation of £723m.

I think a lot of investors reckon that with revenue growth in the continuing business, the company’s economics could grow more attractive over time. It has an existing customer base and some well-known nutrition brands.

Lots still to prove

If the business shows even fairly modest improvement in its financial performance, I could well see an argument for the share price to march further upwards.

So, am I tempted to buy? Absolutely not.

As each January’s seasonal bodybuilders and supplement buyers know, sometimes the dream is more compelling than the reality.

The THG dream remains attractive in many ways: building on the success and experience of its protein business, it can develop a range of digital shopfronts and use targeted marketing to drive repeat business cost effectively.

I’m not ready to buy!

Another long-term duffer among UK tech shares — Ocado, down 88% over five years — continues to try and run a retail business (as a joint venture with Marks & Spencer) and sell its technology to other retailers.

By shedding Ingenuity, THG has moved from that sort of business model to a more clearly focussed one.

I think that has probably helped crystallise the current THG investment case. That may have helped the share price.

But the rump business is growing revenues fairly modestly at best, remains indebted, and continues to make losses. As with Ocado, the business case remains unproven when it comes to turning a consistent profit.

Any good news could help the share price, but I think THG still has a lot to prove and I will not be investing.

The post The THG share price is up 96% since June. Is the recovery on? appeared first on The Motley Fool UK.

A falling stock valuation led to demotion in June, but it’s been clawing its way back. From a 12-month low, the THG share price has more than doubled. Is the tentative recovery going to stick?

The back story

At IPO in 2020, the company looked like it could be the next shiny growth-by-acquisition online retailer. It’s already easy to forget how much the pandemic had hurled digital commerce into the spotlight. There were even those who thought it might be just the thing needed to clear out the old ways of doing retail business, and that bricks-and-mortar stores would soon be history.

But what a change just a few short years — and a bit of biotech brilliance in vaccine development — can make.

The THG share price really went off a cliff in 2021, with the company facing increasing investor scrutiny. There were questions over governance. Some raised doubts over the value of its technology and logistics arm, Ingenuity. And it came under a short-selling attack.

The stock crashed. And today, even after the gains since the summer, we’re still looking at a 92% loss since flotation.

The turnaround

In the past few years, THG has divested or discontinued a number of its acquisitions and brands. And as recently as January 2025, the company demerged its THG Ingenuity division into a privately-owned, standalone business.

We’re left with two consumer businesses, THG Beauty and THG Nutrition. Is the slimmed-down new-look THG worthy of investor consideration?

In a trading update on 14 October, Q3 was billed as the “strongest quarter of organic sales growth since 2021“. It returned the company to year-to-date revenue growth, which looks like something of a milestone.

Revenue grew 6.3% in the quarter, from continuing operations and at constant currency. Both businesses contributed to the upturn.

The way forward

With a quarter to go, the company reiterated its earlier year-end guidance. It expects revenue in the second half to grow between 1% and 3% at THG Beauty, and by 10% to 12% at THG Nutrition.

It really does look like the current management might have pulled it off. Rating the valuation of the THG share price, however, is not a simple task.

After years of losses, there’s still no profit on the table. But forecasts have the annual loss per share falling dramatically by 2027. In fact, if the trend is solid, I see a good chance of profit by 2028.

We’ve seen brokers warming a little too — at least taking THG out of Sell territory. And right now I see two out of six even rating the stock a Buy.

What to do?

There’s still plenty of risk with three more years of losses on the cards. Rising revenue should lower the chance of needing a new cash injection, but that fear remains. And it’s a competitive business.

But I do like the look of the refocus I’m seeing. Growth stock investors could do well to consider buying now.

The post Here’s why the THG share price climbed 24% in October! appeared first on The Motley Fool UK.

After the British nutrition and beauty digital retailer’s rollercoaster year, many are asking: is this comeback for real, or just a sugar rush for investors thinking about bargain hunting?

A hard-earned turnaround

With a £664m market-cap, THG sits at the lower end of the index, on par with the likes of Aston Martin Lagonda and Close Brothers. That’s a far cry from its peak, when it was worth close to £8.5bn.

Most recently, revenue growth in Q3 has shifted sentiment – it’s the strongest quarter of organic sales since 2021, with revenue up 6.3% to £405.2m. JP Morgan’s recent rating upgrade didn’t hurt either, and CEO Matthew Moulding has called this turnaround a hard-earned victory after years of chaos and restructuring.

The company, which owns brands including Myprotein and Cult Beauty, suffered devastating losses in late 2021, with the price crashing by over 70%.

Now, after years of struggles, it seems determined to rise up through the ranks again. So does that make the current price an opportunity — or a value trap?

Let’s take a closer look.

Assessing value

THG’s still loss-making, so there’s no price-to-earnings (P/E) ratio for investors to weigh up. Instead, its price-to-sales (P/S) ratio comes in at just 0.4, which could suggest undervaluation, but the price-to-book (P/B) ratio of 1.59 is a tad rich. It’s this blend of numbers that often draws value investors to the story.

The share price performance has certainly been impressive. It’s up 68% over the past six months – but don’t forget, THG’s still down more than 90% from its all-time high. That leaves plenty of room for growth if the firm can deliver consistent results.

But what’s the city saying?

Most brokers reviewing THG rate it Neutral or Hold, with an average 12-month price target predicting little-to-no growth in the next year. Some are optimistic about the operational improvements and brand portfolio, while others remain cautious amid profitability issues and competitive threats.

Risks to consider

THG’s debt stands at £601m. It’s not massive for a business of this size, but it outweighs equity, which isn’t ideal. Add in its quick ratio below 1, and it’s clear THG doesn’t have enough liquid assets to cover its short-term liabilities.

That’s worth thinking about, especially as online retail’s a crowded territory and rivals are quick to pounce on any weakness.​

Analysts note the company’s ongoing restructure – including selling non-core assets and automating operations – should help in the long term. But any slip in consumer demand or further volatility could cut short the rally.

My verdict

After years in the wilderness, THG appears to be getting its act together. Sales are up, and forecasts predict profitability by the end of fiscal 2025. Value investors looking for turnarounds might want to consider THG, since the low share price and improving numbers could merit a closer look.

Personally though, it’s still a bit too risky for my portfolio just yet. The mix of weak liquidity, debt, and fierce competition gives a lot to weigh up. Still, I’ll be watching to see if it grows stronger as the year ends.

The post Look who’s back! Loss-making British retailer THG has rejoined the FTSE 250. Time to buy? appeared first on The Motley Fool UK.

The fact that it still commands a market capitalisation slightly north of half a billion pounds is a reminder of how big hopes once were for the online nutritional supplements and beauty product retailer.

Has that dream now completely burned out? Or might the current THG share price offer a potential bargain for an investor with a long-term mindset?

A sizeable business, but with lots to prove

For the first half, THG reported revenues of £0.8bn. That was 8% lower than the equivalent period last year. But it goes to show that THG is a fairly substantial business.

The performance had other aspects of ‘yes, but’ to it.

For example, net debt fell year on year by 8%. However, it still came in at £321m. That is not insubstantial.

Similarly, free cash flow improved year on year – but was still negative. Cash and cash equivalents at the end of the first half were less than half of the equivalent at the same point one year before.

On a positive note, the company swung to a £76m profit in the period. That’s compared to a £121m loss in the prior year.

But wait! That had been driven by its Ingenuity division, now demerged. Considering only continuing operations, the first half’s loss of £66m was actually larger than the previous year’s.  

Now you see it, now you don’t

Hang on. Why demerge Ingenuity?

After all, that division had been a core part of the THG investment case. Its focus was on enabling other companies to sell products online.

A bit like Ocado, the firm’s own retail operation was in a sense a proof of concept (as well as being a sizeable standalone business) that could help sell technical solutions to other digital retailers.

The City never really got as excited as THG management did by the prospects laid out for Ingenuity. Indeed, I think that partly helps explain why the THG share price has tanked over the past five years.

On that basis, taking Ingenuity out of the equation ought to make the rump of the company easier to understand – and to value.

But the downside of that move is that, with Ingenuity removed from the picture, the investment case is now more narrowly focussed on the firm’s core business of online beauty and nutrition sales.

With beauty sales falling 12% year on year in the first half and nutrition sales ticking up just 1%, I remain to be convinced that the strategy can help justify even the current share price, given the ongoing red ink at the business.

THG has some firm foundations for growth, with a large customer base and proven sales ability. But its loss-making business model remains unproven as far as I am concerned.

Even at its current level, I am not convinced that the THG share price is a bargain – and will not be touching it with a bargepole.

The post Down 95%, is the THG share price now in bargain territory? appeared first on The Motley Fool UK.

Today, investors are increasingly turning to artificial intelligence (AI) tools for inspiration — something I couldn’t do back then! But, is ChatGPT any good at helping individuals make the right decisions in their wealth-building journeys?

Here’s what OpenAI’s chatbot would do with a cool grand to invest in UK shares.

A broadly solid framework

My virtual assistant started well, offering sound advice right off the bat. It preached about the benefits of diversification and the importance of establishing clear investing goals. ChatGPT also stressed that buying UK stocks carries risks, including capital losses.

Overall, it’s hard to fault my cyber companion’s run-through of Investing 101. If I was being picky, it would have been nice to see references to the merits of tax-free investment vehicles like Stocks and Shares ISAs or Self-Invested Personal Pensions (SIPPs). Regretfully, ChatGPT was silent on this subject.

Please note that tax treatment depends on the individual circumstances of each client and may be subject to change in future. The content in this article is provided for information purposes only. It is not intended to be, neither does it constitute, any form of tax advice. Readers are responsible for carrying out their own due diligence and for obtaining professional advice before making any investment decisions.

UK stock picks

But, how did the chatbot fare on specific stock market picks?

Well, it’s a fan of the FTSE 100. A string of large-cap shares formed the bulk of its selections. They included pharma titans AstraZeneca and GSK and dividend stocks Diageo, Unilever, and BT.

My robotic pal didn’t completely limit its ambitions to the Footsie. For instance, growth shares Ocado and Deliveroo also star in the collection. Curiously, so does Nvidia. ChatGPT acknowledged this isn’t a UK stock, but cited its popularity among British investors as justification for its inclusion.

All of these companies face risks and opportunities. I’m bullish on some of the digital genie’s choices, less so on others. In fairness, I think it’s a largely credible and balanced basket of UK shares for a £1,000 investment.

However, I have a bone to pick with ChatGPT’s final idea.

Buyer beware

The last UK stock to make the cut was online cosmetics and dietary supplements retailer THG (LSE:THG), which owns brands such as Myprotein, Cult Beauty, and LOOKFANTASTIC.

The THG share price chart makes for ugly viewing. A disastrous 95% collapse over five years means long-term shareholders are nursing deep wounds. So, what does ChatGPT see in the beaten-down e-commerce stock?

Well, it referenced the company’s “strong revenue growth since its inception“. That sounds great. The problem is, it isn’t true. Not only did THG experience an 8.7% revenue slump in FY23, but that trend continued in FY24 with a further 2.5% decline to £1.7bn. To make matters worse, it continues to be a loss-making business.

In addition, a forward price-to-earnings (P/E) ratio above 68 means the stock isn’t particularly cheap either. That said, there’s some cause for optimism. A strategic demerger of its technology services arm, Ingenuity, was completed this year. Some analysts hope the new streamlined outfit will be more cash-generative and less capital-intensive, but it’s not enough to convince me to buy the shares yet.

Although it produced some pearls of wisdom, the fact that ChatGPT spews out false information is a huge red flag. I’d always take what the AI bot says with a pinch of salt and conduct my own due diligence before investing any cash.

The post I asked ChatGPT how I should invest £1,000 in UK stocks. Here’s what it said! appeared first on The Motley Fool UK.

Can that be rational?

After all, there is a lot to like about the business – so much, in fact, that several sophisticated financial companies have tried to buy the whole business in recent years at a far higher valuation than it currently commands on the stock market.

So, should I buy the share for my portfolio now, hoping that it could rebound in a big way in the coming year (and beyond)?

Here’s what dogging THG

The issue, as I see it, boils down to whether or not THG has the potential to be a profitable business over the long term.

So far, the numbers are not promising. While it has been doing over a couple of billion pounds a year in sales, THG’s bottom line looks horrendous.

Last year it lost £248m after tax, following a post-tax loss of over half a billion pounds the prior year. The consistently loss-making business has spilt a lot of red ink in its few years on the stock market.

That, bulls might say, is the nature of the beast. THG is a technology business, investing now to build scale in its online retail outsourcing business. Once that reaches the right point, the positive case goes, that expenditure could pay off in spades. It is a similar story to the one heard from believers in the Ocado business case.

As with Ocado, in my opinion, the crux of the issue comes down to whether such a view holds water. Is THG indeed spending now to reap the rewards later? Or is it simply a business with a failed model, ready to keep burning up cash for the foreseeable future?

Strategic fog does not help

I confess, I am even more confused now than a year ago.

For years, THG was touting its Ingenuity platform as a key growth driver. But last month it finalised plans to demerge that business.

That could help achieve a higher valuation for Ingenuity, which I think has never been well understood in the City.

But I wonder why THG, having blown the platform’s trumpet for so long, decided to demerge it. I also question the rationale for raising money by issuing new shares (as THG did) to demerge the business. Why not simply keep the division within THG, or cut the losses and close it down?

THG management’s strategic plan now seems less credible to me than it did before (and I have long had my doubts). Meanwhile, the beauty division grew sales in the first nine months of last year, while THG’s nutrition revenues shrank 7%.

If another bidder comes along, I reckon the THG share price could soar again.

Looking at the fundamentals, however, I see THG as a consistently loss-making business losing sales in a key division and lacking strategic consistency. Even though it sells for pennies, things might yet get worse. I will not be touching this share with a bargepole.

The post Down 95%, could the THG share price bounce back in 2025? appeared first on The Motley Fool UK.

From a contrarian perspective though, could this represent a long-term bargain for my portfolio?

Complex business with some real strengths

With so many sceptics in the City, I think THG struggles to put forward its investment case.

This is a sizeable business. Last month’s interim results showed revenues of £911m in the first half alone. While that was almost the same as in the prior year period, the fact that THG maintained revenues on that scale belies what has happened to its share price since the turn of the year.

Adjusted EBITDA (earnings before interest, tax, depreciation and amortisation) also grew 4% to £49m. Personally, I do not find that a useful measure as it typically excludes actual costs a business faces, but I recognise that THG continues to perform decently using that measure.

THG’s nutrition business is performing strongly and I expect that to continue. Meanwhile, its e-commerce outsourcing service has won some new customers. External revenue for that line of business was 13% higher than in the same period last year.

It’s fallen 90%+ for a reason

Still, there are quite a few things about THG that help explain why the shares have plummeted and trade for pennies apiece.

While adjusted EBITDA in the first half showed year-on-year growth, the company still recorded an operating loss of £85m. That was better than in the prior year period, but still substantial.

Net debt grew 31% to £350m. Meanwhile, free cash outflow in the first half more than doubled compared to the first six months last year, to £128m. For a company with a market capitalisation of £740m, I see that as a sizeable and unattractive number.  

A contrarian play with risks

So what do we have here? From a glass-half-full perspective, THG has a business that is generating serious revenues and still has substantial room for growth. If it can bring its costs under control and move towards profitability, the current THG share price could appear a real bargain looking back 10 years from now. This could turn out to be a gift for contrarians today.

As with many contrarian investment ideas though, there are a lot of unknowns here. If the business moves into profitability, I expect investor sentiment will dramatically improve. But whether that ever happens remains to be seen. The company is haemorrhaging cash. Its business model remains unproven when it comes to making a profit on a sustained basis.

Even if it can be turned around, that might happen by a buyer taking the business private if it is on its knees in future.

So I fear the THG share price could go lower from here and there is no guaranteed it will ever go up again. For now, I am giving the shares a miss.

The post Is the THG share price a gift for contrarian investors? appeared first on The Motley Fool UK.

Yesterday (17 September), the e-commerce firm formerly known as The Hut Group reported its interim results. The market reaction wasn’t positive and the share price has since fallen 15%.

Will I buy the dip? Let’s find out.

Uninspiring results

THG consists of three divisions:

• THG Nutrition focuses on supplement products and owns the MyProtein brand
• THG Beauty owns several beauty brands, including LookFantastic
• THG Ingenuity is an end e-commerce platform offering technology solutions for retailers

In H1, revenue at Beauty (its largest division) rose 6.9% year on year to £531m. Ingenuity revenue jumped 14.1% to £80.2m, but was more than offset by a 7.5% fall in sales (£299m) at its Nutrition business.

Overall, this meant group revenue increased 2.2% to £911m, when stripping out £23m of discontinued revenue. Adjusted EBITDA improved by 3.6% to £48.8m, translating into a 5.2% margin (an improvement from 4.9%).

Management did say its nutrition business had picked up in the (current) third quarter, and it sees a return to growth there. Beauty sales are also growing, albeit more slowly than at rivals like Warpaint London.

Looking ahead to the full year, THG anticipates that EBITDA will be towards the “lower end” of the current consensus range (£134m-£156m). It blamed foreign exchange pressures for this.

Given the tough consumer environment, I’d call this trading resilient rather than exciting. The firm still posted an £84.4m operating loss for the period.

Three becomes two?

The big news is that THG plans to demerge its Ingenuity technology platform. This interesting but loss-making division has been dragging on group profitability, so this could unlock value for shareholders (if approved).

The firm says the positive cash flows from the remaining nutrition and beauty segments could support future dividends.

However, I note that Ingenuity generated £226m of its £306m in revenue from THG itself during H1. Only £80m came from elsewhere, so there would be plenty to untangle and clarify.

Plus, net debt stood at £685m in June. How would that be split? There’s still a lot of uncertainty here.

Should I buy THG shares?

It’s difficult to know whether the stock is in the bargain basement or not. On a price-to-sales (P/S) basis, it looks very cheap, trading on a multiple of just 0.38.

However, I find it difficult to predict whether sales in this business will be higher or lower five years from now. Growth has been very patchy and it’s still losing money, which adds risk to the investment case.

Stepping back, I also worry that its collection of brands lack durable advantages that protect them from competition. Some sort of ‘moat’ is the first thing I look for in an investment and I can’t see one here.

Personally, I get my supplements from Amazon as part of my Prime membership. When I compare MyProtein‘s subscription perks, I don’t see a compelling reason to switch. Doorstep delivery? Free shipping? Flexible subscription? Amazon offers all that, while I also watched AC Milan vs Liverpool last night with Prime!

All things considered, I see better stocks out there for my portfolio.

The post After a 93% share price crash, is this now a bargain basement UK stock? appeared first on The Motley Fool UK.

The shares have lost over 90% of their value during that time. The past year alone has seen a 32% fall in the THG share price.

But there is a lot to like about the company, in my opinion. So could the THG share price be a sleeper worth me acting on today with a long-term mindset?

Lots to like

Let me start by explaining what I see as the positive elements of the THG investment case. This is a business with sizeable revenues.

In the first quarter of this year, for example, the company turned over more than £450m. It has a sizeable customer base, with the beauty division’s loyalty programme having over 2m members.

THG owns what it describes as the fastest-growing sports nutrition brand across UK retailers: Myprotein. The nutrition business is growing fast, with international expansion in potentially huge markets such as India.

The company’s Ingenuity ecommerce platform is growing, with first quarter revenues up 4% year-on-year.

Strategic questions

However, a share does not lose over 90% of its value for no reason. Partly, I think the decline reflects an over ambitious listing price. But I also see grounds for investor concern when it comes to the underlying business.

THG is a difficult business to understand. It is a ragtag of online retail businesses mixed with a B2B digital commerce offering. That could make sense in the long term but, so far, I do not think THG has yet proven the profit potential of such a business model.

The company has not helped itself with the tone of its communication with the City as well as a host of sometimes confusing performance metrics.

Last year, revenue fell and the company reported an operating loss of £185m. Unusually, the company’s accounts do not report loss before tax in the main table of statutory results. A bit of searching in the body text shows that they came in at £252m.

In the headlines to those results, the company said: “Free cash flow breakeven achieved”.  In fact, negative free cash flow was £1.1m. That is not free cash flow breakeven at the full-year level, even if it was much closer than the prior year, which saw £213.4m of net cash outflows.

Difficult to value

So is this lossmaking company with net debt of £218m a bargain? It could be, if it can use the assets it has built over recent years to generate ongoing sizeable revenues and move into profitability.

But the obscure basis of how it presents its accounts is already enough to put me off buying. THG is perfectly allowed to present its accounts the way it wants. But I feel it makes it even harder to understand a company that already has rather an enigmatic business model.

If I cannot confidently value the business, I cannot tell whether the THG share price is a bargain or a value trap. I therefore have no plans to invest.

The post Is the THG share price a long-term bargain? appeared first on The Motley Fool UK.

But investing is all about looking forwards. As billionaire investor Warren Buffett once said: “If past history was all that is needed to play the game of money, the richest people would be librarians.”

So what could the future hold for the price?

Financial prospects

The company’s preferred measure of financial performance is adjusted EBITDA (earnings before interest, tax, depreciation and amortisation).

It’s not yet reported its results for the year ended 31 December 2023 (FY23), but its most recent market update says profits are expected to be “above £117m”.

For FY24, analysts are predicting £153m.

On the face of it, the company appears to have turned the corner. Or has it?

Taking a closer look

To answer this, it’s necessary to delve a little deeper into the company’s financial statements.

EBITDA’s popular because it’s intended to assess the operating cash flow of a business. It removes the cost of servicing debt, as well as depreciation and amortisation which are non-cash accounting entries. However, for THG, the ‘I’, ‘D’ and ‘A’ are significant.

The company’s FY22 accounts report an interest charge of £56m. Depreciation and amortisation were £94m and £109m respectively. To keep things simple, I’m going to assume all three will be unchanged during FY23, at a combined £259m.

If I’m correct and EBITDA is £117m, the company’s pre-tax loss for FY23 will be £106m.

And with a forecast margin of only 5.6%, it would take another £1.9bn of revenue (turnover was £2.2bn in FY22) to break even.

It therefore appears to me that the company’s a long way off from being profitable at a pre-tax level.

And I think that’s an important milestone because THG must pay interest on its debt, and even though depreciation and amortisation are non-cash entries, the company’s assets will need to be replaced at some point. To quote Buffett again, “does management think the tooth fairy pays for capital expenditures”?

Therefore, until there’s a clear path to profitability, I can’t see the share price changing very much.

Possible changes

In 2021, the company said its strategy was “to provide each division with its own growth and capital platform, through individual public market listings or partnerships, with THG retaining significant majority ownership“.

One of the company’s biggest shareholders agrees, claiming that the company would be worth more if it was split into its operating divisions – beauty, nutrition and its e-commerce platform.

However, progress to date has been slow. But if a restructuring programme was implemented, I think it could help lift investor sentiment.

And there are other reasons to be positive. The company now has twice as many active customers as it did in 2019. And the value of its average basket size is getting bigger. Also, the company plans to raise its margin to 9% over the “medium term”.

But even if it managed to achieve this, it would still be a long way from covering its interest, depreciation and amortisation charges.

For this reason alone, I suspect the THG share price could continue to disappoint.

The post Down 92% since IPO, what’s going on with the THG share price? appeared first on The Motley Fool UK.