MARKET REPORT: Hut Group shares bounce after critic has change of heart and withdraws recommendation to short
Troubled online retailer The Hut Group (THG) received a boost after one of its critics had a change of heart.
The Manchester-based company, which sells clothes, make-up and protein shakes, jumped 6.5 per cent or 12.4p, to 202.4p after City researcher The Analyst withdrew its recommendation to short – or bet against – the stock, effectively saying that the share price has no further left to fall.
It marks a change in tone for The Analyst since October when it issued a note suggesting its clients short THG shares, saying the company’s ecommerce business was highly overvalued.
The Hut Group boss Matt Moulding (pictured), has seen a horror show since September when concerns about its business sent the share price plunging
It also flagged concerns about the firm’s corporate governance and cash flow.
THG has experienced a horror show since September when mounting concerns about its business sent the share price plunging and saw several large backers including Goldman Sachs and Blackrock slash the size of their stakes.
The company’s founder and chief executive, Matt Moulding, attempted to stem the bleeding but instead added fuel to the fire as a disastrous investor meeting in October caused the stock to sink even further.
Stock Watch – Futura Medical
Futura Medical was in good health after flagging ‘multiple interested parties’ for its fast-acting erectile dysfunction gel.
The group was in ‘advanced discussions’ around potential licensing agreements covering ‘major regions and countries of the world’.
The treatment, known as MED3000, is undergoing a clinical study involving over 100 patients.
Futura is planning to submit it to US regulators next year.
The shares rose 6.7 per cent, or 2.1p, to 33.7p.
The share price rout sparked a massive overhaul of the company’s business model and a weakening of Moulding’s control over the business, including the relinquishing of his ‘golden share’ which would have allowed him to veto any takeover approaches.
THG is also on the hunt for an independent chairman to add a new voice in the boardroom.
However, despite yesterday’s rise the shares are still valued at less than half of their 500p listing price when THG floated in September 2020. Shares reached an all-time high of nearly 800p in early January.
The FTSE 100 dropped 0.99 per cent, or 71.89 points, to 7198.03 while the FTSE 250 sank 1.01 per cent, or 230.5 points, to 22549.88.
Soaring cases of the Omicron variant and a lockdown in the Netherlands over the weekend sent markets into a downward spiral.
Oil prices fell to their lowest levels since the start of December to around $70 a barrel as traders fretted lockdowns will hit demand for fuel. Shell shed 1.4 per cent, or 21.6p, to 1574.2p while BP slipped 3.1 per cent, or 10.4p, to 323.3p.
Rolls-Royce, which makes engines for passenger aircraft, was also under pressure falling 3.3 per cent, or 3.82p, to 110.48p amid worries the pandemic could dent demand from airlines.
Meanwhile, fears that more restrictions will hit High Street footfall and consumer spending in the critical festive period hammered retailers.
Primark-owner AB Foods lost 2.1 per cent or 40.5p, to 1912p while luxury fashion firm Burberry shed 0.5 per cent, or 9p, to 1736p.
The prospect of fresh clamp downs on socialising also dented event organiser Informa, which sank 5.3 per cent, or 26.6p, to 475.4p.
Travel stocks took a battering early in the session but managed to regain ground in late afternoon.
British Airways-owner IAG briefly plunged to a 13-month low of around 125p before recovering to close at 130.94, down 0.8 per cent, or 1.1p on the day.
Premier Inn-owner Whitbread saw similar fortunes, dropping sharply in early deals before slowly climbing to finish up 0.7 per cent, or 18p, at 2787p.
Chilean copper giant Antofagasta tumbled 5.5 per cent, or 75.5p, to 1294p after the victory of Left-wing presidential candidate Gabriel Boric in the country’s presidential election on Sunday.
Boric has previously voiced opposition to mining projects on environmental grounds, raising fears his administration will clamp down on the sector.