The Hut Group (THG) is facing a continued decline in its share price, despite reporting strong figures in its latest update. The company’s shares have dropped significantly from over £3 each to less than £2.40 each in early trading. As a result, THG has lost over £800 million in value, causing its market capitalization to fall below £3 billion, which is less than a third of its previous value earlier this year.

In an attempt to address investor concerns about corporate governance, THG’s founder, Matthew Moulding, has decided to relinquish his ‘golden share’ that granted him additional voting rights. Additionally, the company has made changes by appointing an independent chairman and adding a Softbank executive to its board. These moves demonstrate the commitment of the Japanese tech giant to its investment in THG.

Nevertheless, investors and analysts remain concerned about the slower growth rate and margin pressures faced by THG. Simon Bowler, an analyst at Numis, highlighted the worsening momentum and cash profile of the company’s core businesses. While the strong order book is seen as a positive, it is not enough to offset the challenges being faced. Jefferies analysts also acknowledged the progress made with Ingenuity (THG’s e-commerce platform) and the strength of the Softbank relationship in THG’s Q3 update. However, they pointed out the margin challenges caused by input costs and foreign exchange pressures, particularly in Asia where resell prices and costs have become mismatched.

Overall, despite THG’s positive figures and efforts to address governance concerns, investors are still unconvinced, leading to the continued decline in the company’s share price. With slower growth and margin pressures affecting its performance, THG needs to strategically navigate these challenges in order to regain investor confidence and restore its market value.

Useful links:
1. THG Official Website
2. BBC Article on THG’s Share Price Decline