Listed foodtech and the Cinderella syndrome

By Frank Buhagiar on Monday 13 November 2023

Listed foodtech and the Cinderella syndrome
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CommentaryFoodTech Investment

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

Was good while it lasted. Week ended 3 November 2023, share price risers in FFF’s listed foodtech space outnumbered fallers by a multiple of FIVE. A big downwards move in US Treasury yields and a Nasdaq surge, the explanations given for the positive week in Food on the Move’s ASSUME THE BRACE POSITION. Listed foodtech hitching a ride on the Nasdaq’s slipstream, it seemed.  All’s well with the world once again, it seemed.  Hurrah! One week on, however, and foodtech share price fallers have the upper hand once more: 14 risers, 28 fallers and four non-movers.  Boo!

Standard operating procedure: a quick drop-in on US Treasuries and the Nasdaq for a little market context.  Bearing in mind foodtech’s down week, expecting a spike in yields and a Nasdaq sell-off of some kind.  But what’s this? US Treasury yields largely held steady at the 4.6%(ish) level, admittedly after something of a rollercoaster ride. Holding on to the previous week’s strong gains, a win of sorts there.  What’s more, the Nasdaq ended the week up 2.4%. And yet…listed foodtech couldn’t join the party. Risk on week maybe.  But early-stage, capital-hungry food/agtech companies, perhaps just a little bit too risky to be invited to the ball…

Among the fallers, Oatly shares gave back some of the previous week’s strong gains.  No mystery to solve here.  The oat drink company’s Q3 Report, the culprit.  CEO Jean-Christophe Flatin’s accompanying comments start positively enough: “I am pleased with the progress that we made in the third quarter. Our profitability exceeded our internal expectations and improved sequentially in each segment. We are clearly starting to see the positive impacts of the bold actions that we have been taking over the past year, and we remain on track to achieve profitable growth in 2024.” Shame it didn’t end there.  Last sentence, not music to the market’s ears: “We now expect full year 2023 constant currency revenue growth to be near the low end of our 7-12% range and fourth quarter gross margin to be in the mid-20%s.”  Shares ended the week off 14%.

Benson Hill, another of the previous week’s strong performers.  Another to report Q3 numbers.  Another to end the latest week in negative territory, this time off 20%. The press release’s highlights, something of a mixed bag:

  • Reported revenues decreased 8 percent year-over-year to approximately $113.1 million. Proprietary revenues increased by 27 percent year-over-year.
  • Reported gross profit was $4.1 million (gross loss of $0.2 million when excluding an approximate $4.3 million impact from open mark-to-market timing differences).
  • The Company ended the third quarter with $86.2 million of cash, restricted cash, and marketable securities.
  • Management improves its 2023 financial guidance.
  • The Company expects to pay down approximately 50 percent of the senior convertible debt in November.

After a 150% share price rise over the course of the week ended 3 November 2023, courtesy of a well-received strategic review, understandable that a little ground has been ceded. Still, Friday’s close at US$0.317 around double the US$0.16 level they closed at on 27 October 2023.  Management got to be happy with that.

Question is, could Oatly and Benson Hill both be victims of the “better to travel than to arrive” rule? Both companies put out press releases announcing the date of their respective quarterly earnings.  Both companies clock strong share price gains in the run up to the numbers.  And both share prices fall sharply on the release of the reports.  Thing is, if they have indeed succumbed to the old rule, then…

Watch out Burcon Nutrascience.  The plant-based protein co. announced it “will hold an investor conference call and webcast on Tuesday, November 14, 2023 at 5:00 p.m. Eastern time to discuss its financial results for the fiscal second quarter ended September 30, 2023.  The Company’s financial results will be issued in a press release prior to the call.”  Yikes.  Shares finished the week up 30% at CAD0.13. Double yikes.  Two out of three yikes.  All eyes on next week then. Can the shares hold on to their gains post 14 November?  Or will Burcon, like Oatly and Benson Hill before it, find itself banished from the ball too?