The founder of THG has hit out at London鈥檚 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 鈥渨ar stories鈥�.
On Monday THG鈥檚 share price shot up 45% to 95.8p following a 鈥渉ighly preliminary and non-binding indicative proposal鈥� 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 拢550 million, while sales rose 2.7% to 拢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 鈥榞olden share鈥� 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鈥檚 share price bombed. Not even the fact that Moulding gave up his 鈥榮pecial share鈥� 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 鈥渘ot where we planned at the start of the year鈥� largely the result of our strategy to minimise the impact of inflation upon our customer base鈥�.
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%.
鈥淚n the words of Alanis Morissette 鈥業sn’t it ironic鈥�,鈥� Moulding, who recently posted that THG’s treatment on the LSE fuelled its startup spirit, wrote on LinkedIn.
鈥淚t’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.
鈥淭he purpose of 鈥榯he game鈥� is simple: bet that a share price will fall, and make sure you win the bet by doing everything possible to discredit the company.
鈥淭he 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.鈥�
The video in the post was put together for THG鈥檚 2022 staff Christmas presentation, he said, drawing heavily on Wolf of Wall Street. It opens with the line: 鈥淵ou are lower than pond scum.鈥�
鈥淭his repetitive pattern across the LSE explains why there are minimal pension or institutional funds investing in the LSE,鈥� Moulding continued. 鈥淚n simple terms, the UK market has suffered from years of 鈥榦ver-fishing鈥�, where small groups of industry professionals come together to try and damage UK businesses, and their share prices.聽
鈥淣obody 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.鈥�
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. 鈥淵ou 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.鈥�
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He concluded: 鈥淢any 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.
鈥淭his 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.
鈥淔orcing the UK public to bail out the UK market can鈥檛 be a credible solution, and won鈥檛 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?
鈥淭he 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!鈥�