Three theories for the price one…

By Frank Buhagiar on Monday 4 September 2023

Three theories for the price one…
Image source: Three theories for the price one…
CommentaryFoodTech Investment

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

With the Nasdaq up 3.2% over the course of the week ended Friday 01 September 2023, FFF’s listed foodtech space was only ever going to have a good week, wasn’t it?  Sure did, at least in terms of share price risers outnumbering fallers – 27 risers, 16 fallers, four non-movers.  Theory#1 passed with flying colours: when Nasdaq has a good week, chances are listed foodtech does to.  Question is, a flash in the plan or the start of a prolonged run for the risers?

Theory#2.  Strong gains on Wall Street.  Feel good factor rises.  More punters splash out on ordering food online – or at least there’s a perception they do. Enough anyway for online food delivery companies to clock across the board share price gains. Time to test the theory.  Ocado up 17.5%; DoorDash up 7.7%; Grab up 3.5%; Just Eat Takeaway up 4.7%; Deliveroo up 1.7%; Dada Nexus up 16.6%; HelloFresh up 11.84% - all up on the week.  What’s more, none of the above put out any material news during the week.  All down to the theory then?

Delivery Hero, one glaring omission from the list.   Share price down 1.9% on the week.  Theory debunked? Not necessarily. Case of the writer cherry-picking the data to look good? Not at all.  Perfectly reasonable explanation why Delivery Hero was a non-participant in the sector-wide rally. Unlike its peers, the company did issue a release, its Half-year Financial Report covering the six-month period January–June 2023.

According to YahooFinance, Delivery Hero’s key metrics are moving in the right direction: revenues up 27% to €4.84billion compared to H1 2022; net loss 45% lower at €830.1million compared to H1 2022; loss per share better too at €3.04 compared to H1 2022’s €5.75 loss. Problem is, as reported by MarketScreener, the numbers fell short of expectations: “…a net loss of a good 832 million euros was accumulated between January and the end of June - compared with just under 1.5 billion euros in the same period last year. However, analysts on average had hoped for a smaller loss of just under 570 million euros.” Company-specific reason then why Delivery Hero bucked the rising trend. Theory#2 lives to fight another day.

For Theory#3 need to take a look at the week’s worst performer - Opticept Technologies.  Shares off an eye-watering 49%.  No news out from the food and plant industry tech provider, at least nothing on the corporate website.  No negative research notes out on the stock, at least none that could be found.  No insider sales, at least none that have been announced.  A mystery then.  What about the share price graph, any clues there?  Hmm…share price fall was spread out over the week.  And at relatively large volumes too. Take a look at the numbers:

  • 28 Aug 2023: 53.78k shares traded
  • 29 Aug 2023: 432.86k shares traded
  • 30 Aug 2023: 934.95k shares traded
  • 31 Aug 2023: 384.85k shares traded
  • 01 Sept 2023: 211.45k shares traded

Total shares traded during the week: 2,017.89k. Compare that to the previous week’s total of 258.52k shares traded.  Mr Market got a whiff of something?  Equity raise on the cards perhaps?

Was only back in December 2022, when management announced the results of a Rights Issue which provided “the Company with approximately SEK 106.3 million before deduction of costs…” Writing at the time of the launch of the equity raise, CEO Thomas Lundqvist had this to say: “The issue gives us the opportunity to strengthen the balance sheet, which gives us financial flexibility and the opportunity to develop and manufacture the systems that we see our existing customer base will demand in 2023.” SEK 106 million equates to around £7.5 million. Nine months on, do the corporate coffers need replenishing?

Cue Theory#3. Companies planning a fund raise can be tempted to put out a press release or two to generate interest ahead of the launch of a rights issue or similar. A little buying activity can give the share price a little boost.  A higher share price can help get a raise away.  Could be the difference between a successful or an unsuccessful outcome.

Opticept might have form here.  31 October 2022, the company announced it had entered “into an agreement with a global forest company for the treatment of cuttings in Brazil”.  Not much to the announcement: “OptiCept Technologies has today entered into an agreement with Aperam BioEnergia LTDA (‘Aperam’) in Brazil regarding OptiBoost for the treatment of Eucalyptus cuttings…The technology will be tested over a 5-month period, for which Aperam pays 50,000 euros. In order to carry out the testing, it is required that an OptiCept Saga machine is made available to Aperam, OptiCept's revenue for the machine is not included in the above contract sum.” Not the biggest piece of news, however, by the end of the week on Friday 4 November 2022, Opticept had launched the above rights issue.  Opticept, one to keep an eye on then.  Theories require constant testing after all…