Why the stock market troublemakers could also be interesting

Last Updated: 29. Januar 2024By

When searching for a lucrative investment, it can make sense to take a closer look at so-called problem children. Consider whether there were good reasons for the losses and whether a turnaround is likely.

The red lantern in the M-DAX in 2023 was HelloFresh (WKN: A16140). The stock of the meal kit delivery company lost around 30% last year. For comparison: The index gained around 8% in the same period.

HelloFresh, source: Aktien Screener Investor Verlag During the corona pandemic, HelloFresh’s business boomed. The company’s market value was 16 billion euros. HelloFresh even made it into the DAX, which represents the largest 40 German companies. Now, the market value of the meal kit supplier is only 2 billion euros.

Profit warning caused a stir There was a major loss of trust last fall. When the numbers for the third quarter were announced, the profit forecast was still confirmed, but two weeks later a profit warning followed. The group’s operating profit for 2023 was drastically revised downward. Growth was expected to be only 5%.

The poorer-than-expected performance of HelloFresh is partly due to the struggling US business. Beyond the big pond, HelloFresh is struggling to attract new customers and even here at home, not everything is going perfectly.

New customers often only decide on HelloFresh when they can take advantage of attractive discounts at the start of their subscription. Existing customers only reactivate their subscription if they receive an attractive offer as a returning customer. The cost of customer acquisition is correspondingly high. In the first nine months of last year, advertising and marketing costs increased by 11%.

Where growth potential lies Good news for HelloFresh is that the average order value of customers has also increased. The company has also expanded its offering to include so-called „ready-to-eat“ products. This means that there are now ready-to-eat dishes, such as delicious snacks or desserts. This is popular with customers.

Appealing to investors: the cheap valuation For you as a potential investor, it is also interesting that the market value is only about 10 times the expected profit. So the stock is quite cheap and a turnaround cannot be completely ruled out.

Perhaps HelloFresh will also experience a comeback when restaurants have to increase VAT. Instead of dinner at a restaurant, a cozy cooking evening at home could be preferred. The annoying shopping and the time-consuming search for a recipe are eliminated because HelloFresh delivers.

A look at HelloFresh, yesterday’s German stock star, is definitely worth it. You can then decide for yourself whether you want to have the stock in your portfolio or not.

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