Sequence spotting in the listed FoodTech space

By Frank Buhagiar on Monday 27 March 2023

Sequence spotting in the listed FoodTech space
Image source: Sequence spotting in the listed FoodTech space
CommentaryFoodTech Investment

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

Bad news first.  Fifth week in a row of more share price fallers than risers in FFF’s listed FoodTech space - the week ended 24 March 2023 saw 26 fallers; 21 risers; and two non-movers.  Now the good news.  The number of share price risers has been steadily increasing over the last three weeks – from nine during the week ended 10 March; to 15 seven days later; and now 21.  Financial investment disclaimer alert: “past performance is not a guide to future performance” but eagle-eyed readers will have spotted an incremental increase in the number of risers in each of the last two weeks of six.  Can listed FoodTech make it three sixes in a row next week and in the process keep up the sequence?

Sticking with sequences, this week’s Food on the Move picks up where last week’s “Desperately seeking reasons to be positive” left off - with the next installment of the BOXED (BOXD) saga.  Last week, (BOXD) shares lost 76% seemingly on the back of an article in the Wall Street Journal regarding the possibility of the online grocer filing for bankruptcy.  One week on and the shares added 140% to close at USD0.243.   No intention to file for bankruptcy? White knight to the rescue? Funding secured?  None of the above.  Only news out was a press release put out by Bragar Eagel & Squire.  According to the announcement the “…nationally recognized stockholder rights law firm, is investigating potential claims against Boxed…on behalf of Boxed stockholders. Our investigation concerns whether Boxed has violated the federal securities laws and/or engaged in other unlawful business practices.”  Yikes.

The press release goes on to say: “On March 14, 2023, The Wall Street Journal published an article entitled ‘Household Retailer Boxed is Negotiating With Lenders for Bankruptcy Sale.’ The article reported that Boxed might file for bankruptcy, as the Company continues to explore a possible sale of its business. The article noted that Boxed is considering this drastic action less than two years after going public through a merger with a special-purpose acquisition company (‘SPAC’) and is also trying to establish a new commercial banking relationship after transferring the majority of its cash out of its accounts at Silicon Valley Bank.”  The chance of squeezing something out of BOXD shares enough to trigger a short squeeze?  A story that promises to run and run.  Forget about a BOXD saga, more like a BOX(D) set…

Speaking of SVB, shares in Beyond Meat (BYND) appear to have shaken off the fallout from the bank’s collapse – as reported by the Financial Times, SVB had been a backer of the plant-based foodie: “Founded 40 years ago, it (SVB) has grown into a fixture in global tech, having banked groups such as Cisco, Ring, Beyond Meat and Shopify in their earliest stages.”  Shares in the former FoodTech darling put on 4.7% to close at US$16.27, still a little way off the US$17 level the shares were trading at before the bank collapsed but signs the market is starting to look BYND SVB…

Like BOXD above, Local Bounti’s (LOCL) share price performed an abrupt about-turn.  Unlike BOXD, that meant shares in the vertical farmer lost half of their value to close at USD0.372.   Only last week, Food on the Move was reporting a 47% share price rise after the company secured an amendment to its credit facility with Cargill.   Perhaps the market is reassessing the deal or wondering just what LOCL’s management have in mind when they speak of “several thoughtful steps we expect to take to ensure that we have access to capital to support our growth strategies and keep our current development on track while we scale up our enterprise, including through potential sale-leaseback transactions or similar strategies.”  Looks like Deutsche Bank might have done just that after the broker slashed its price target for the stock from US$9 to US$2. Deutsche did though retain its BUY rating.  Little choice but to keep its Buy rating.  After all, the bank’s price target is almost six times higher than the current share price.  Six…there’s that magic number again.