HelloFresh Stock: Crash Following Profit Warning

Last Updated: 16. November 2023By

Shares of HelloFresh have dropped by more than 20% in the morning trading session (as of November 16th, around 10:30am) after the company’s unexpected profit warning. Since mid-September, the stock had been performing well, but its price has since halved and is currently trading at around 16 euros – its lowest point since March.

Just a few weeks ago, the MDAX company had confirmed its forecast for the current year – now there’s been an unexpected turnaround: both sales and profits will fall short of the company’s goals. The timing of the announcement has left investors scratching their heads, and HelloFresh has now a credibility problem.

The reasons for the reduced forecast are a rather sluggish business in terms of customer acquisition, as well as unexpected problems in two U.S. factories due to maintenance work, water shortages, and lack of personnel.

As a result, the MDAX company has now downgraded its goals for the current year. Sales growth is now expected to be between 2 and 5%, instead of the previously targeted 2 and 8%, and the operating profit is estimated to be between 430 and 470 million euros, instead of the previously expected 470 and 540 million euros.

The market’s reaction to the most recent quarterly figures was far from enthusiastic, and the weak demand in Q3 brought the HelloFresh shares down at the end of October. Now, the picture looks even worse, and the stock price has dropped significantly since the beginning of the year.

The timing of the profit warning is very unfortunate: only a few weeks ago, the company had confirmed its annual goals when presenting its quarterly figures. Was this not foreseeable at the time? HelloFresh has certainly lost some trust and credibility with investors – many are wondering if the company is unable to provide reliable forecasts.

At any rate, caution is advised when it comes to the HelloFresh stock. While the price is seemingly attractive after halving in two months, it remains to be seen if a bottom has been reached. The company needs to first restore confidence. If demand picks up, the stock may become interesting again in the future.