Investors back Sorrell’s aggressive growth for S4 Capital despite heavy losses

Sir Martin Sorrell’s S4 Capital felt the bite of its own aggressive hiring strategy this morning, with losses more quadrupling in the first half of the year to £75.4m.

The loss included £100m of primarily combination payments, some linked to “continued employment”, and the associated expense and amortisation totalling £93.9m versus £41.6m in the first half of 2021.

Despite the widening losses, shares jumped over 12 per cent for the company to 161p this afternoon, with investors seeming to back the digital advertising firm’s quest for growth.

S4 has snapped up over 30 media groups in the last four years alone.

“Combinations remain a key part of our growth strategy, however, for the time being we are focused on organic growth and maximising value from our existing businesses, where momentum remains strong,” former WPP chief Sorrell said.

On the upside, gross profit was up to £375.3m, while revenue increased by 60 per cent to £446.4m: a far cry from the profit warning the London-listed firm issued in July, which saw shares tank over 40 per cent.

Peel Hunt said the S4 stock remains “undervalued” in the wider market.