THG Share Price: Is The Hut Group Tide Turning?

Summary:
• THG share price has done relatively well in the past few weeks as investors reflect on key events in the company.

THG share price has done relatively well in the past few weeks as investors reflect on key events in the company. The Hut Group shares rose to above 60p this month, which was about 70% from the lowest level this year. It remains significantly lower than its all-time high of 160p. 

Is the tide changing?

THG has made headlines in the past few months. Earlier this month, the company said that it had agreed to buy Softbank’s stake in the company. Softbank made a big loss in the transaction since the shares crashed by more than 90% from its all-time high.

THG announced its third-quarter results on Tuesday. The firm said that its beauty and nutrition business had revenue growth of 10.2%. This increase was better than its previous estimate of 2.1%. It continued growing its market share in its key segments. At the same time, its Ingenuity business had over 51.7 million pounds. 

THG’s revenue has grown by 8.8% this year in line with what the management was expecting. It expects to have an adjusted EBITDA guidance of between 100 million and 130 million pounds. The CEO said:

“The fourth quarter has started positively, and we are well positioned from a logistics and supply perspective to meet the significant uplift in demand anticipated during the cyber period, whilst continuing to deliver a high-quality customer experience.”

The Hut Group also said that it had secured additional banking facilities. It signed a 156 million pound banking facility with BNP Paribas, HSBC, and Natwest. 

THG share price forecast

The daily chart shows that the The Hut Group share price has made a strong recovery in the past few weeks. As this happened, the stock moved slightly above the 25-day and 50-day moving averages while the Relative Strength Index (RSI) has formed a bearish divergence pattern. A closer look shows that it has formed a small double-top pattern whose chin is at 44.80p. 

Therefore, the stock will likely resume the bearish trend as sellers target the key support level at 40p. A move above the resistance at 58p will invalidate the bearish view.