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Ted Baker Up 6%, Falling Back This Morning – Why?

Tim Worstall
Tim Worstall trader
Updated 12 Aug 2022

Trade Ted Baker Shares Your Capital Is At Risk

Key points:

  • Ted Baker shares have risen these past few days
  • Another jump this morning, to fall back again
  • It's all driven by uncertainty about any bid

Ted Baker (LON: TED) shares are up 5% over the past 5 days. They also rose nicely at open this morning and have given up most of those gains. That's more volatility than we'd expect to see in such a stock so what's going on here? The answer being that Ted Baker isn't really being valued as an operating business at present. It's all about hopes and given how swiftly those can change then there's going to be volatility in the TED share price.

The background is one common enough among retail stocks these days. Lockdown of course damaged bricks and mortar retail and there was that associated surge in online selling. This brought problems for two sets of retailers – those whose online sales boomed and also those whose didn't. Those whose did boom are now finding that as traffic returns to physical stores they're often overmanned or overstocked. Boohoo for example could be said to be suffering from this. But those whose sales didn't boom online also have a problem. Which is that both the brand and the finances of the company suffered badly from that no boom. Which is rather where Ted Baker finds itself.

The brand just isn't the cutting edge it perhaps once was. The online performance hasn't kept pace with the wider market. So, what's the future for the brand? And these sorts of retailers are all, all, about the brand. The design, the name, the associated social status with the products, that's what's being sold. Actual clothes and products can be bought at Primark, in strict economic terms retail is about Veblen Goods these days.

Ted Baker share price
Ted Baker share price from IG

Also Read: A Guide To The Best Clothing Stocks To Buy Right Now

Most of the above is well known and understood in the market. Which is why there's this current volatility in Ted Baker shares. For this isn't, really, any longer about the trading performance of the business itself. TED has, largely enough, put itself up for sale. They've received a number of takeover bids, all of them informal. One Ted Baker bid went through due diligence and was then withdrawn. That led to, well, sort of “anyone else want to try?” as the plan. That might be unfair – heck it is unfair – but that's what the real action in TED is currently. Is anyone going to turn up and offer serious money to take over the company?

And that is, really, what is driving that Ted Baker share price. Up when there's some thought that someone is about to emerge with an offer, down again on more mature consideration that maybe there isn't. It is, of course, possible that this all goes on long enough that the corporate performance itself becomes important again but that is unlikely to be for some time. Ted Baker is up for sale – so the determinant of the TED share price is “Is there a buyer and what's the price?”

Tim Worstall
Tim Worstall is a freelance writer specialising in economics and the financial markets.