HelloFresh Shares Slide as Activist Investor Buys In

HelloFresh stock plunges while activist fund buys shares

Why does a company generating cash and holding €246.9 million in the bank trade as if it were going bankrupt tomorrow? That is the question puzzling investors trinc HelloFresh, the German meal kit and prepared food company, after its shares collapsed trinc earnings results. The trigger was a slide where management acknowledged annual sales would deviate toward the lower end of guidance, with a projected decline of between 3% and 6% at constant currency. The market, which has punished the company for years due to its inability to grow, reacted with massive selling. But not everyone is fleeing: some argue the punishment is excessive and that the company is undervalued.

The plunge and market interpretation

The share price fell sharply once the document became known. For some analysts, the problem is not just the figure, but the credibility of a management team with a history of failures and broken promises. "It seems disproportionate, but the market wants growth and that is what is lacking," summarizes one of the first reactions. According to this view, the company has decided to prioritize profitability over volume, shedding customers who only bought with coupons and discounts. This reduces revenue but improves margins. However, the market does not reward this strategy in the short term.

Numbers supporting optimism

On the other side, published data show a company that has stopped burning cash. HelloFresh closed the first half with €246.9 million in cash, compared to €211.1 million the previous year. Its bank debt and bonds amount to €174 million, and it generates more than €100 million annually in free cash flow. With a market capitalization around €1 billion, the stock trades at 0.1 times sales, a multiple that, according to the most optimistic, prices in the company's disappearance. "Here there are €30 per share," asserts a convinced investor. The full calculation, including EBITDA projections and buybacks, yields a surprising margin.

Prepared food business and stagnation

The Ready-to-Eat division, operating under the Factor brand in the United States, has been the growth engine in recent years. But latest data show a slowdown: revenues of €495 million, a year-on-year growth of barely 1.2%, far from the 15% previously recorded. Order numbers have also stalled. The company has launched Factor in Germany and expects to return to growth in the second half. The question is whether the business model, which requires significant investments in kitchens and automation, can sustain profitability without sacrificing volume.

Activist makes a move

Amid the storm, an activist fund linked to Florian Schuhbauer, a member of the supervisory board, has increased its stake. The news boosted the share price over several sessions. "If at any moment the activist comes out saying they will increase their stake, the stock skyrockets," notes an investor. The fund, along with the Norwegian sovereign wealth fund, has long voted against executive compensation packages. Pressure on the management team is growing, and some speculate about a change in strategy or even a takeover bid.

Competition and skepticism about the model

Not everyone shares the optimism. Some question the long-term viability of the business. "I don't quite see the logic in the business. Basically having someone do your shopping and bring it home for you to cook," comments a participant. Competition from chains like Mercadona or Amazon Fresh, which offer prepared food, is fierce. Additionally, the company ceased operations in Spain due to lack of profitability, fueling doubts about its ability to conquer new markets. Janus himself acknowledges that "the company is shabby, the business is what it is," but insists that "you enter here because it is undervalued."

Future: turnaround or bankruptcy?

According to trinc of the company, the key lies in whether HelloFresh can generate between €120 and €140 million in free cash flow this year. If it achieves this, the logical valuation would exceed €1 billion in market cap, with 150 million shares outstanding. The company has already executed 85% of planned efficiency measures and expects savings to reflect in the second half. The challenge is convincing the market it can stabilize the business and return to growth. Meanwhile, the stock continues to trade as if the end is near. As one investor says: "The stock market reflects both manipulation and sentiment."