HFG GR

HelloFresh SE

Consumer, TMT


Presented:11/24/2020
Price:€44.00
Cap:$8.51B
Current Price:€9.01
Cap:$1.69B

Presented

Date11/24/2020
Price€44.00
Market Cap$8.51B
Ent Value$8.59B
P/E Ratio29.78x
Book Value€2.99
Div Yield0%
Shares O/S173.56M
Ave Daily Vol1,199,973
Short IntN/A

Current

Price€9.01
Market Cap$1.69B
HelloFresh SE engages in the provision of personalized meal solutions. It operates through the following segments: United States of America (USA), International, and Holding. The International segment comprises Australia, Austria, Belgium, Canada, Germany, the Netherlands, Switzerland, and the United Kingdom. The Holding segment represents centralized overhead functions, where certain costs are recharged with a markup to the operating entities with the exception of strategic and finance costs. The company was founded by Jessica Nilsson Schultz, Thomas W. Griesel, and Dominik S. Richter on October 4, 2011 and is headquartered in Berlin, Germany.

Publicly traded companies mentioned herein: BlueApron Holdings Inc (APRN), HelloFresh SE (HFG GR), Nestle SA (NESN SW)

Highlights

The presenter is short shares of Hellofresh (HFG GR), a German-based company that delivers meal-kits to prepare home-cooked meals using its recipes. The stock is up 150% YTD and is currently trading at €46 a share. HFG has been an impressive growth story; it grew revenues from €17MM in 2013 to €3.4B in 2020. However, the presenter views HFG’s business as a low value-add business model that has benefited from temporary COVID-related tailwinds. With a high churn rate of ~90% coupled with high sales and marketing costs, he does not believe that the stock price accurately reflects the flawed underlying business fundamentals. As a result, he sees 50% downside to ~€25/share by applying a 20x EBITDA multiple to his ~€416MM EBITDA estimate.

HFG engages in the provision of personalized meal solutions; it currently operates in 14 different countries, with the US comprising 50% of its revenues. The stock is up over 150% YTD, but the presenter believes that HFG’s current €8B market cap is unsustainable, given its fundamentally flawed business model. 

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