HelloFresh, the once-heralded recipe box delivery company, experienced a staggering 42% drop in its share price on Friday morning, marking its worst trading session ever. This nosedive came on the heels of the company’s disappointing 2024 earnings outlook.
Analysts at UBS, who had previously warned of potential risks surrounding HelloFresh’s guidance, were taken aback by the extent of the company’s poor outlook. They described the growth and earnings forecasts as “far worse than anticipated,” highlighting the expected persistence of elevated customer acquisition costs throughout 2024.
Deutsche Bank echoed these sentiments, labeling HelloFresh’s 2024 outlook as “disappointing.” The bank also noted the removal of previously announced targets for 2025, which HelloFresh attributed to a “very different operating environment.”
In its outlook, HelloFresh, headquartered in Berlin, projected adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) of 448 million euros ($480 million) for fiscal 2023, down from 477 million euros the previous year. However, the company anticipates a further decline in 2024, with adjusted EBITDA expected to range between 350 million and 400 million euros, despite a forecast for increased revenue from the North American market.
HelloFresh cited increased production capacity, marketing expenses, and the ramp-up of two new fulfillment centers as the primary reasons for the projected decline in earnings.
The company is scheduled to release its annual results on March 15.
HelloFresh, which listed on the Frankfurt Stock Exchange in 2017, enjoyed a significant boost during the pandemic as consumers increasingly turned to tech platforms offering convenient home delivery services. However, its fortunes have taken a sharp downturn since its peak in 2021, with shares plummeting 70% in 2022 and an additional 30% in 2023.
(Source: WSJ | BBC | Market Watch)
