Complete the sequence…

Food on the Move: FFF’s weekly roundup of listed FoodTech’s movers & shakers

• Week ended 14 July 2023: an ‘Up’ week for FFF’s listed FoodTech space
• Week ended 21 July 2023: a ‘Down’ week…
• Week ended 28 July 2023: an ‘Up’ week…
• Week ended 04 August 2023: ????...

Answer: a ‘Down’ week. 30 share price fallers compared to just 12 risers (six non-movers). Here’s hoping the sequence continues for one more week so that the next instalment of Food on the Move reports an ‘Up’ week – more share price risers than fallers…

May have been a ‘Down’ week for listed FoodTech as a whole, but the standout performance came from one of the 12 risers.  Step-up MissFresh. Shares in the Chinese fresh-food retailer soared 286% to finish the week at $1.98.  Title of Yahoo! Finance article, Missfresh Announces Entry of Share Purchase Agreements for Financing and Business Acquisition, a clue.

Yahoo! goes on to explain that MissFresh has “entered into two share purchase agreements with two investors, respectively (the ‘Share Purchase Agreements for Financing’), and another share purchase agreement with Mejoy Infinite Limited and its shareholder (the ‘Share Purchase Agreement for Business Acquisition’)…Under the Share Purchase Agreements for Financing, the investors agree to subscribe 5,400,000,000 Class B ordinary shares of the Company in aggregate for a total purchase price of US$27.0 million…the new investors will hold 5,400,000,000 Class B ordinary shares of the Company, representing 88.1% of the Company’s total issued and outstanding shares.”

Meanwhile, “Under the Share Purchase Agreement for Business Acquisition, the Company agrees to purchase all ordinary shares of Mejoy Infinite Limited held by its shareholder at an aggregate purchase price of US$12.0 million in cash…” Mejoy? “Mejoy Infinite Limited is a digital marketing solution provider incorporated in Hong Kong. Mejoy is dedicated to helping its clients deliver their online marketing campaigns to engage their target customers and drive higher growth of the clients’ businesses.” Less Mejoy, more MissFreshshareholderjoy after that share price rise…

For every riser there were of course 2.5 fallers. Zero sugar drinks co. Zevia found itself in the faller category – shares shed another 10% to finish the week at $2.52.  ‘Another’ because the previous week the share price was down by more than a third (-35%) on the back of disappointing Q2 sales numbers and lowered full-year guidance.

CEO Amy Taylor had this to say: “Second quarter net sales were below estimates due to unexpected supply chain interruptions that negatively impacted service levels…Customer demand continued at or above expectations as reflected in our order book. Customer fulfillment rates, however, fell sharply in the second half of the quarter and did not keep pace with strong customer demand. We have implemented aggressive measures, including changes in supply chain leadership and pausing some components of our supply chain transition to restore service levels. We expect these issues to be resolved by the end of 2023…” CEO sounding confident then that Zevia won’t be validating that old stock market sequence, “Profit warnings come in threes”, any time soon.

Time for a question. What does Zevia and oat milk producer Oatly have in common? Answer: a lot. Both are drinks companies.  Both reported disappointing Q2 numbers during the week ended 28 July 2023. Both reduced full-year guidance.  Both share prices fell on the back of the disappointing results.  Both saw their share prices cede further ground during the week ended 04 August 2023 - Oatly’s shares lost another 11.5%, meaning the share price now stands at $1.45, more than a quarter down since the Q2 release.

Motley Fool article “Oatly Stock Is Running Out of Time” probably didn’t help.  Why is time running out? The article’s ‘key points’ reveal all: “Oatly expanded too quickly. Demand growth is now slowing. The company is slashing capital spending and cutting costs, but those moves will only slow the rate that it's burning cash. Oatly's manufacturing operations appear bloated and inefficient, and it has limited time to turn things around before cash runs out.” Oatly, another hoping to avoid that three-profit warnings in a row sequence.

Moving in the opposite direction, Steakholder Foods (STKH). Lack of news not enough to stop the cultivated meat specialist’s hot streak – shares added 18.8% over the course of the week to close at $1.39. STKH, it seems, still in the slipstream of a run of positive news flow that has included a favourable write-up from research outfit Zacks Equity Research and the company’s 27 July 2023 announcement: “Steakholder Foods Signs First Ever Multi-Million-Dollar Agreement with GCC Governmental Body to Commercialize its 3D Bio-Printing Technology”.  The shares have now posted gains in each of the last three weeks.

Same is true for Verde Agritech (NPK).  As with STKH, NPK shares were up (+10.5%) on the back of no new news.  As with STKH, the potash fertiliser co. put out an announcement on 27 July 2023: Verde to Sell Carbon Credits.  As with STKH, the news was well-received by the market at the time.  As with STKH, NPK’s shares have now posted gains in each of the last three weeks.  That’s a sequence both companies won’t want to see broken…