THG Holdings Share Price Forecast November 2021 – Time to Buy THG?

Shares of British e-commerce company THG Holdings (LSE: THG) are in the green today, closing at 203.8p as of November 5^th (17:52 GMT). The shares plunged 52% in October due a variety of reasons.

THG Holdings – Technical Analysis

According to the financial statement released by THG Holdings, the market cap of the company sits at £2.486 billion with total assets worth £3.283 billion. Revenue for 2020 was at £1.61 billion with a profit margin of -33.01% compared to £1.14 billion in 2019.

Oscillators such as Commodity Channel Index (20)(−87.6), Average Directional Index (14)(55.0), and Awesome Oscillator(−170.6) are indicating a neutral action. On the other hand, Moving Averages such as Exponential Moving Average (10)(228.7), Simple Moving Average (10)(223.8), Exponential Moving Average (20)(281.9), Simple Moving Average (20)(273.4) and Exponential Moving Average (30)(329.9) are indicating a sell action.

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Recent Developments

THG Holdings has faced a lot of criticism from investors and analysts last month due to a combination of reasons ranging from corporate governance concerns and a lack of information from management on the group’s growth prospects. BlackRock, which was a significant shareholder, has dumped half of its 10% stake. The company has made efforts to reassure investors by releasing an investor relations presentation which was badly received.

To most UK customers, The Hut Group and its brands such as Glossybox and Skinstore are the most familiar parts of THG. It also runs its own direct-to-consumer brand sales platform known as Ingenuity which enables both The Hut Group and third parties to market, warehouse, and ship products directly to customers. THG Holdings has made some substantial changes to incorporate a new governance model to appease the market. CEO and founder Matthew Moulding, has given up his controversial “golden” share to improve corporate governance which previously used to give him ultimate control over the company’s decisions.

The company has also introduced changes to its boards of directors, such as the appointment of an independent chair. Andreas Hansson from SoftBank, which invested £530 million in THG this year, joins as a non-executive director. All these developments prove that THG is out there trying to make an effort to reform the group.

Should You Buy THG Shares?

Investors interested in THG should look at the company’s performance over the last year. Japanese investment firm Softbank is one of the company’s major shareholders. THG is working on rolling out Ingenuity for some of Softbank’s brands. New clients for Ingenuity include Coca-Cola Europacific Partners, Mondelez International, and Swedish Match which proves that it appeals to sophisticated global customers. As a result, the group’s revenue increased by 43% in the first half compared to the same period last year. Its Ingenuity division grew strongly raking in £86 million revenue in the six months, representing a growth of 40%, while its beauty division revenue grew 56%. However, the company is still loss-making, as it reported a loss of £17 million in its first half.

Apart from eating the market’s concerns about corporate governance, the company has also been trying to alleviate worries about its growth. While its latest trading update suggests that the company is fundamentally strong, it is not guaranteed. Various factors could erode the hard-earned trust from investors such as announcing unforeseen costs. Despite these risks, you can buy THG shares as a speculative turnaround investment as the company has built a stable of notable e-commerce brands which positions the company well for the future.

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