It is fair to say that the hellofresh-Aktie (WKN: A16140) has gone back to the bottom of some facts. At the end of last week, the stock was trading at a price level below 37 euros. This is a level that we last saw after the Corona crash in April or May 2020.
There has really been a lot of growth since then, which has made HelloFresh shares cheaper. However, the broader market clearly doesn’t believe in growth stocks at the moment. Whether it is correct or not is another question. But now market participants are also worried about other things.
For example, which companies have strong pricing power in times of inflation. In one opinion, the e-commerce player may not belong to the group of these actions.
Share HelloFresh: No pricing power…
Inflation is slowing, according to a recent assessment by JPMorgan. Consequently, HelloFresh does not have particularly strong pricing power for its own meal kits. Discounts are often used when trading kitchen boxes, with price playing a decisive role for many consumers, according to an analyst.
Yes, that is true in a way. There is definitely competition in the HelloFresh stock market. However, this is a judgment that I find somewhat myopic in some parts. After all, the management of the e-commerce player has already managed to impose a premium price for cooking boxes and ingredients in the composition compared to buying at a discount store. 7.22 million active customers who ordered an average of 4.1 times in the last quarter also form a strong ecosystem. The price per cooking box was also 53.40 euros, which is not cheap. Yes, even more than before. So this value was unstable in parts of the success story.
In this light, I can partially understand why analysts are saying: HelloFresh’s stock has less pricing power. But management is actually already successfully implementing a premium pricing model. Inflation is indeed a problem for growth stocks. But, in principle, more moderate increases could be applied.
Anyway: Rated Cheapest
Still, regardless of the pricing power and inflation issue, HelloFresh stock is low in value. With a market cap of €6.44bn and annual sales of €6bn most recently, the price/sales ratio isn’t even favorable at 1.1. Based on AEBITDA, the company is profitable with a value of 505.2 million euros.
This growing stock is also a victim of the current phase of the market. But maybe an opportunity for long-term investors who believe in this e-commerce player. Despite inflation or lack of pricing power, which in case of doubt still needs to be tested.
HelloFresh article shares: No pricing power? first appeared in The Motley Fool Germany.
Vincent does not own any of the shares mentioned. The Motley Fool does not own any of the shares mentioned.
Motley Fool Germany 2022