Share Prices & Company Research


25 October 2021

Redmayne Bentley Market Round Up

Tech giant Google is moving forward with its plan to cut fees for its subscription users to a maximum of 15%. This is half of what Apple demands, thus putting the rival under pressure at a time when it is facing criticism over its 30% App Store commission. This new pricing structure will take effect on 1st January 2022. The two companies have recently announced that they would cut fees on in-app purchases from 30% to 15% for the first US$1m of sales that app developers made. Although the new change in fee structure will not apply to the biggest games, it makes up the majority of sales on the app stores of both companies. According to Sensor Tower, the market analytics firm, Google earned US$11.6bn in fees, with US$9.6bn from mobile games as total spending on its Play Store reaching a staggering US$38.8bn. The announcement by Google put immense pressure on Apple amidst a lawsuit battle against Epic games, which has led it to come under fire from Spotify over the size of its commission and its App Store rules.

In the UK, Manchester-based multi-website retailer THG is facing massive problems under the leadership of its founder, Matthew Moulding. The company has lost around 65% of its value in the last two months, with investors’ fears centring around Mr Moulding’s ‘golden share’ allocation. This gives its holder more voting rights than other shareholders, meaning Mr Moulding could retain absolute control of decision making at the company’s annual general meetings. The shares saw a relief rally last Monday when it was announced the structure would be dropped, though it is just a drop in the ocean of investor apprehension. Shares have since continued to suffer headwinds to any further upside.

Further to investors’ concerns were Moulding’s sale and leaseback deal of company property on the eve of the company’s listing, his borrowing against his stake in the business, and the frequency of errors in THG’s reporting. Such errors tarnish the reputation of the company, making it difficult for it to borrow more money either from investors or banks which, in turn, stagnate the growth of the company, ultimately resulting in its downfall and potential seizure.

The recent presentation to the investors did little to allay fears. It seems to be too little too late for the company to turn its fortunes around and the succession of problems implies that the team were ill prepared for public listing.

Please note that investments and income arising from them can fall as well as rise in value. This communication is for information only and does not constitute a recommendation to buy or sell the shares of the investments mentioned.
Redmayne Bentley Market Round Up
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