Monday 08 November 2021

Does it really suck to list in London?

THG logoWe were intrigued to read an article in the Times on Saturday quoting embattled Chief Executive of THG, Matt Moulding, that he regretted floating the group in London and wished he had floated in New York instead.

Moulding has not made light of his media opportunities of late. You may remember his mid-October investor presentation, after which the share price tumbled by a third on the back of investor concern about business direction and the THG Ingenuity platform.

Saturday's Times article quotes an interview given to GQ, which you imagine Moulding may soon come to regret. The tone is certainly unlikely to make the City feel any more warmly towards him - there are few things that rattle market confidence more than a leader who sounds like they've lost their cool.

But it is the assertion that London “has sucked from start to finish” and he “should have IPO’d in America” which got us thinking. TechMarketView has long been a champion for London listings. We comment on listings in HotViews and track listing data in our quarterly Quoted Sector review (see here for Q3 2021 and work back through linked articles). So to see if it really does "suck" in London, we've taken a look at the share price performance of some of the biggest tech listings of 2021 to-date. (Current share prices are taken at close on Friday 5 November):

  • Digital auction platform Auction Technology Group debuted in March at 600p a share. Its stock is now valued at 1408p a share, or a 135% increase on listing price, giving it a current market cap of £1.7bn.
  • Consumer review website Trustpilot also listed in March with a market cap at that date of £1.1bn. Its shares were offered at 265p and are now priced at 325p, an increase of 23% on listing price.
  • Cyber specialist Darktrace listed in April at a market cap of £1.7bn. After an initial surge in value, it has had a torrid time on the markets of late, with share price falling rapidly following a negative analyst report. Despite this rocky period, its shares stand at 577.5p, still an uplift of 130% on its listing price of 250p.
  • Money transfer fintech Wise debuted to great acclaim in July at a market cap in excess of £8bn, with an offer price of 800p. Its share price now stands at 832p, an increase of 4%.

And now let's consider the performance of THG. It listed in September 2020 and was at that date the biggest London IPO since 2015 at a market cap of over £5bn. Its share price opened at 500p and currently stands at 204p, a massive 59% decrease.

What can we infer from this? Aside from Deliveroo, all of these big 2021 tech stock listings have enjoyed net share price gains since listing. They may yet lost ground - prices go down as well as up of course - and life as a listed company is no easy ride. But even Deliveroo's much-documented fall from grace has not been as harsh as THG's.

Whilst investors don't always get it right and no market is perfect, Moulding can't ignore the basic truth that price is the mechanism by which supply is matched to demand. That same truth would hold in New York as it does in London. And if he really believes THG is an "amazing" business and "in better shape than it has ever been", as he bravely asserts in the GQ interview, he clearly has some work to do to convince investors. A calmer head in media interviews would be a good first step.

Posted by Tania Wilson at '16:15' - Tagged: listing   markets