TG (LSE:THG) has performed exceptionally poorly since listing in early 2021. The UK stock has lost around 93% of its market value in that period.

Yesterday (September 17), the e-commerce company, formerly known as The Hut Group, released its interim results. The market reaction was not positive, with the share price down 15% since then.

Should I buy the dip? Let’s find out.

Uninteresting results

THG consists of three divisions:

• THG Nutrition focuses on supplement products and is the owner MyProtein mark
• THG Beauty owns several cosmetic brands including: Look fantastic
• THG Ingenuity is an e-commerce platform offering technology solutions for retailers

In the first half of the year, Beauty (its largest division) revenues rose 6.9% year-on-year to £531m. Ingenuity revenues rose 14.1% to £80.2m, but were more than offset by a 7.5% decline in Nutrition sales (£299m).

Overall, this meant group revenues rose by 2.2% to £911m, net of £23m of interrupted revenue. Adjusted EBITDA improved by 3.6% to £48.8m, resulting in a margin of 5.2% (up from 4.9%).

Management said its nutrition business gained momentum in the (current) third quarter and sees a return to growth in that area. Cosmetics sales are also growing, although at a slower pace than rivals such as Warpaint London.

Looking ahead to the full year, THG expects EBITDA to be at “bottom end” the current consensus range (£134m-£156m). He blames pressure on exchange rates.

Given the hard consumer environment, I would call this trading resilient rather than invigorating. The company still reported an operating loss of £84.4m for the period.

Three becomes two?

The huge news is that THG is planning to spin off its Ingenuity technology platform. This fascinating but loss-making division is weighing on the group’s profitability, so it could unlock value for shareholders (if approved).

The company said positive cash flow from its remaining nutrition and beauty segments could support future dividends.

I note though that Ingenuity generated £226m of its £306m revenue from THG alone in H1. Only £80m came from other sources, so there would be a lot to unravel and explain.

In addition, net debt in June was £685m. How will this be divided? There is still a lot of uncertainty.

Should I buy THG stock?

It’s strenuous to tell if the stock is in a sell-off basement or not. Based on price-to-sales (P/S), it looks very inexpensive, trading at a multiple of just 0.38.

However, I have a strenuous time predicting whether sales in this business will be higher or lower in five years. Growth has been very uneven and it continues to generate losses, which increases investment risk.

Stepping back, I also fear that the collection of brands lacks any lasting advantages that protect them from the competition. A moat is the first thing I look for in an investment, and I don’t see it here.

I personally take supplements from Amazon as part of my Prime membership. When I compare MyProteinsubscription benefits, I don’t see a compelling reason to switch. Doorstep delivery? Free shipping? Flexible subscription? Amazon offers it all, and I also watched AC Milan vs Liverpool with Prime last night!

All things considered, I see better stocks for my portfolio.