IG Design Group shares halved on Friday after issuing a stark trading update revealing significant challenges in its US market operations through December 2024 and into early 2025.

The company’s American division, DG Americas, has been particularly hard hit by ongoing turmoil in the US retail sector. This week, their fourth-largest customer filed for Chapter 11 bankruptcy protection, prompting IG Design’s DG Americas division to set aside provisions of approximately $15 million to cover potential losses from outstanding receivables and associated inventory.

IG Design Group shares were down 55% at the time of writing.

The situation has been further compounded by disappointing Christmas season sales across their product categories. Multiple retail partners are now scaling back or postponing their forward orders, which is adversely affecting revenue projections, production schedules, and cost management.

In response to these challenges, the company has recently appointed Sue Buchta as the new CEO for DG Americas. Buchta, who brings extensive experience from the consumer products industry, will focus on implementing a comprehensive turnaround strategy aimed at restoring the division to profitable growth.

The company now forecasts overall group revenue for the financial year ending March 2025 to fall approximately 10% below the previous year’s figures. DG Americas is expected to see a significant decline of around 13%, while DG International is projected to contract by approximately 1%.

Investors will be upset with the revision of profit expectations, with the group now anticipating to break even for the full year—a substantial departure from current market expectations of $32.0 million.

European stocks were on the front foot again on Thursday as falling borrowing costs and optimism around a cease-fire in the Middle East propelled sentiment higher. Strong earnings across Europe also played a part in boosting the mood.

After the FTSE 100 looked like it was going to break lower and possibly test 8,000 just a few days ago, a lower inflation reading yesterday reset interest rate expectations and raised hopes pressure on the economy would start to ease.

The gloom present in financial markets at the start of the year has been replaced by quiet optimism. That said, slower than expected UK GDP is a reminder of the job the government has on its hands to support UK growth.

Contributing to equity market buoyancy, bond yields were steady again on Thursday, signalling concerns about the UK’s fiscal health was easing. 

“Investors were in a risk-on mood after a ceasefire deal between Israel and Hamas and a positive response to corporate results in the European retail, luxury, and automotive sectors,” said Russ Mould, investment director at AJ Bell.

“The Dax briefly hit a new record high as investors raced to buy shares in German e-commerce platform Zalando after it said full-year earnings would beat previous guidance. Strong customer growth paints a very different story to the UK retail market where shopkeepers are finding life hard in the wake of cost headwinds and an uncertain consumer backdrop.”

Rightmove was the top riser at the time of writing on hopes home buyers would jump at the chance of lower mortgages.

Experian added 2% following yesterday’s strong trading update and a broker price target increase.

Housebuilders gave back some of yesterday’s gains following an update from Taylor Wimpey. Taylor Wimpey was unable to create the feel-good factor Vistry and Persimmon did with their latest updates. Taylor Wimpey’s average selling price was not as strong as their peers and completions fell.

This hit the whole sector on Thursday, but Taylor Wimpey was the biggest casualty, giving up 4%.

Whitbread shares also suffered following the release of a trading statement highlight slowing UK sales.

“Hotel giant Whitbread checked in with a mixed third quarter update, showing a 3% dip in UK revenue but hints of recovery as hotel performance steadied, said Matt Britzman, senior equity analyst, Hargreaves Lansdown.

“Premier Inn continues to shine as the group’s flagship, but challenges loom with weak UK hotel prices and a sluggish German economy potentially slowing expansion plans. While resilience is evident, Whitbread will need to keep Premier Inn leading the pack to weather an uncertain market.”

Taylor Wimpey shares fell on Thursday after it released a full-year trading statement that could be considered a disappointment compared to its peers.

Taylor Wimpey has reported a slight decrease in completions for 2024, with total Group completions including joint ventures slipping to 10,593, down from 10,848 in 2023.

Persimmon recently reported a 7% increase in completions in 2024.

Average private sale prices fell to £356k from £370k in the prior year. However, the company saw improved sales momentum, with its UK net private reservation rate increasing to 0.75 homes per outlet per week, up from 0.62 in 2023.

The company ended 2024 with a robust order book valued at £1,995 million, representing 7,312 homes, an increase from £1,772 million and 6,999 homes in 2023. Despite this growth, the company noted weaker pricing in Southern England, with the order book showing underlying pricing approximately 0.5% lower year on year.

In terms of land investment, Taylor Wimpey significantly increased its land approvals to around 12,000 plots in 2024, up from approximately 3,000 in 2023, partly due to increased market opportunities before the Budget. The company maintains a substantial short-term landbank of about 79,000 plots and a strategic land pipeline of roughly 136,000 potential plots.

Looking ahead to 2025, Taylor Wimpey reports encouraging early enquiries but remains cautious, noting that growth in volumes will depend on mortgage rates and their impact on affordability.

The company also warned of increased build cost pressures resulting from the recent UK Budget. Despite these challenges, Taylor Wimpey expressed confidence in the sector’s long-term fundamentals and its position to address UK housing undersupply.

“Volumes aren’t expected to ramp up massively in the near term, and there has been some softness in the average selling prices of its houses at a time when some of its peers are seeing modest rises,” said Aarin Chiekrie, equity analyst, Hargreaves Lansdown.

“Taylor Wimpey also called out that the recent UK Budget is likely to increase build costs this year, putting some pressure on margins. With the current economic uncertainty, there’s likely to be plenty of ups and downs in the short term. But for investors looking for exposure to the sector at an attractive valuation, and a nice income stream while they wait for a recovery, Taylor Wimpey looks like a strong choice.”

IG Group Holdings has announced its acquisition of Freetrade, the commission-free investment platform, for £160 million.

Freetrade, launched in 2018, has grown rapidly to serve 720,000 customers with £2.5 billion in assets under administration by the end of 2024.

The acquisition aims to strengthen IG’s position in the UK trading and investments market whilst providing access to new customer segments. Some may see the £160m enterprise value paid for Freetrade as a bargain.

Freetrade has demonstrated steady growth, with revenue increasing by 32% year-on-year to £27.5 million in 2024. Freetrade’s revenue streams are well diversified across subscriptions, foreign exchange transaction fees, and interest income. The company achieved positive EBITDA for the first time in 2024, marking an important milestone in its growth trajectory.

The strategic purchase comes as the UK direct investing market continues to show strong growth at 10% compound annual growth rate with more investors taking control of their investments personally and financial literacy growing.

IG plans to operate Freetrade as a standalone business, retaining its brand and existing management team, including CEO and co-founder Viktor Nebehaj. The transaction is expected to complete in mid-2025, subject to regulatory approvals.

London’s flagship index jumped on Wednesday after UK CPI inflation fell to 2.5% in December from 2.6% in the month prior, and investors celebrated the potential impact on interest rates.

Even though inflation is still well above the 2% base rate, the simple fact that inflation halted its ascent sent a wave of optimism through UK assets after a gloomy start to the year.

UK stocks rose, bond yields fell, and the pound showed signs of stabilisation.

The FTSE 100 surged 0.7% higher, led by UK and interest rate-sensitive sectors, including housebuilders and utility companies. Even the banks joined the rally.

“A surprise pullback in the rate of inflation has given joy to investors,” said Russ Mould, investment director at AJ Bell.

“It strengthens the argument for the Bank of England to continue cutting interest rates and that’s fired up shares in housebuilders in the hope that mortgage rates will go down and more people will be able to afford to get onto the housing ladder. Banking shares jumped on the prospect of more demand in the mortgage market.

“The inflation reading has also helped to lower bond yields, with the 10-year gilt easing back a little to 4.841%, which will be welcomed with open arms by the under-fire chancellor, Rachel Reeves. However, the prospect of higher costs for companies this year still threatens to drive up inflation if they decide to raise prices, which means people’s living standards won’t suddenly improve because of today’s inflation reading.”

Although many problems still persist for the UK economy, there was little ill feeling in UK equities on Wednesday.

Barratt Redow, Taylor Wimpey and Persimmon jumped around 3%, while Howden Joinery added 3.6% in the hope lower inflation would spur building activity.

Lloyds was 3.5% as investors chose to focus on the financial health of Lloyds customer base instead of how interest rates could impact key profitability and income margins.

Diploma was the top riser, up 3.6%, after reporting organic revenue growth of 7% and maintaining full-year guidance.

There were few losers on Wednesday. Precious metals miners felt the pressure off improving sentiment while a broker downgrade hit Anglo American.

Tekcapital portfolio company Guident has announced the appointment of a US investment bank to conduct a private placement for the autonomous vehicle technology company ahead of a potential NASDAQ IPO later this year.

The investment bank will conduct both the private placement and the IPO raise.

“We are very pleased to have appointed an investment banker,” said Harald Braun, Executive Chairman of Guident.

“The AV industry is rapidly developing, and we believe that teleoperations is critical for the safe roll out of vehicles and robots. The adoption of autonomous vehicles globally is accelerating, and Guident welcomes the accompanying regulatory developments that put the safety of passengers and the public at the forefront of autonomous vehicle rollouts.”

Teleoperations are crucial to meeting many US states’ safety requirements, which stipulate autonomous vehicles must be able to be remotely controlled by a human operator in the case of any mishaps.

Meeting these requirements is a prerequisite to the roll-out of autonomous vehicles in states including California, Florida, Michigan, Arizona, Nevada, and Louisiana.

Tekcapital is yet to provide any insight into Guident’s potential valuation on a successful NASDAQ listing. However, the AV sector is attracting billions in investment, with investors prepared to provide funding at rich valuations to secure a piece of exciting early-stage AV companies.

WeRide’s initial public offering, combined with a concurrent private placement, generated $458.5 million in proceeds. Meanwhile, Waymo LLC has completed its largest funding round to date, securing $5.6 billion from investors. Pony.ai raised $260m at a valuation of over $5bn.

The weight of evidence from recent transactions and the revenue multiples investors committed their cash at suggests Guident could prove to be the jewel in Tekcapital’s crown with a valuation potentially many times Tekcapital’s current market cap.