Unforgiving markets

By Frank Buhagiar on Monday 30 October 2023

Unforgiving markets
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CommentaryFoodTech Investment

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

Tempted…to use last week’s Food on the Move as a template for this latest edition. A tweak of the numbers here, a change of name there, but the overall message stays the same.  10-year US Treasury yields still flirting with the 5% mark. Nasdaq off another 2.6%.  FFF’s listed foodtech space? Almost three times as many share price fallers than risers: 32 fallers, 11 risers and three non-movers.  Last week: 35 fallers, eight risers and three non-movers.  A pre-Halloween horror show. Three more risers than the previous week at least.  A positive. Take anything right now, especially after eight consecutive down weeks (more fallers than risers).  1 September 2023, the last time risers outnumbered fallers. Those were the days.  Come back summer, all is forgiven!

Speaking of forgiving, markets in no mood to show mercy.  Take Cibus.  Shares in the plant gene-editing co. shed 45% over the course of the week.  No company announcement, at least none on the Cibus website at the time of writing.  Seeking Alpha did put out an article on the company though: ‘Cibus: A Pioneer In Gene Editing, The Future Of Agriculture’. Title has a positive tilt to it.

So too does the conclusion: “Cibus is pioneering the use of gene editing in agriculture. The technology is proven, is non-GMO, and is vastly cheaper and faster than any other plant breeding technology. Gene editing can also address complex problems such as plant diseases that stymie all other plant breeding techniques. The company has already delivered enhanced crops to several partners, which are preparing to sell these crops to existing customers. Deals on just three crops, already delivered or in process, will likely produce roughly $2 billion in revenues (8-K filed 09/06/2023) with full market penetration around 2032. The main risk facing the company is the need to raise additional funds before Cibus becomes cash flow positive, likely in a bit more than two years. This risk, however, does not justify the company's severe undervaluation.” The bit “need to raise additional funds”, a reason for the share price fall?  Markets in unforgiving mood…

Agriforce Growing Systems would likely agree.  Shares in the plant-focused agtech off 18% despite announcing ‘AgriFORCE Regains Compliance with Nasdaq Continuing Listing Requirements’.  Would have put that down as a good news item. Interim boss Richard Wong appears to agree, “Maintaining our Nasdaq listing will help enhance our visibility during this exciting period for the Company. Specifically, we are commencing the commercial launch of our patented UN(THINK) Awakened Flour, which has over 5x the fiber, up to 2x the protein and 23% less net carbs compared to regular all-purpose baking flour. At the same time, we are beginning to realize the benefits of our strategic investment and exclusive worldwide license to Radical Clean Solutions Ltd.’s (RCS) proprietary and patent-pending chemical-free Hydroxyl devices within the Controlled Environment Agriculture and Food Manufacturing Sectors. We are witnessing growing interest in this proven technology that eliminates pathogens, mold, mildew and VOCs in food production facilities, and indoor farms. Overall, we are positioning ourselves as a leader within the AgTech space, which we believe will generate significant long-term value for shareholders.”  Markets having none of it though.

And then there’s Benson Hill – shares off 52% over the course of the week.  No press release since 12 October 2023 when, as reported by Food on the Move’s ‘FRIDAY 13TH AND LISTED FOODTECH’, the company put out ‘Benson Hill Announces Strategic Review Update, Third Quarter Earnings Release Dates’.  The announcement went on to say: “Benson Hill, Inc…, a food tech company unlocking the natural genetic diversity of plants, announced today that it expects to host a call on Tuesday, Oct. 31, 2023, at 11 a.m. Eastern Time, to provide an update on its strategic review process. The Company will also release its financial results for the third quarter ending Sept. 30, 2023, before the market opens on Thursday, Nov. 9, 2023…”

31 October fast-approaching.  Signs investors are exiting positions ahead of the big reveal – Friday 27 October, 4.46 million Benson Hill shares traded. Compare that to the 300,000 or so shares traded on each of the three days prior to Friday 27 October. Not a surprise then that most of the damage to the share price during the week came on…Friday 27 October – shares down by a third.  Sell first ask questions later, all the hallmarks of unforgiving markets.