Forum Topics Marley spoon to buy or not to buy
Mozzie
a week ago

I believe MMM will do quite well as they continue to grow.   They appear to have consistent COGS of between 55% to 58%, which is very predictable for a grocery business.  I think grocery delivery and meal kits are here to stay, however, I think their customers will be transitory, over time.  I can't understand how some companies appear to offer such good discounts to my valuations and others not.  I personally "guess"  MMM to be about 35% undervalued at today's prices based on what I think to be conservative revenue growth rates.  

 

 

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Thewiggles195
2 weeks ago

I think Hellofresh is my pick, they are making money in a space where competitors have been losing money. The management are experienced in growing into new markets and being profitable. It is my view that market share from traditional grocers will slowly trickle towards these kinds of businesses, even if every other family bought these meals for one or two nights a week, thats a huge chunk of food not being sold by woollies or coles. The only problem is they are based in Germany. :( (edit: recently went down to a price at 30 P/E and share price has grown over 200% pa for the last two years)

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kingcash
a week ago

I love the HelloFresh product, and business, and wish it was listed on the ASX... I have overseas holdings but it is much more accessible if it was on the Australian market. In my opinion, Marley Spoon will continue to play second fiddle to HelloFresh, and I think that is okay. I don't believe this is a winner takes all situation, and I think their is a substantial growth runway for both businesses. At a valuation of 30x earnings, I would be confident that I would be exposed to significant upside if I was to buy HelloFresh, and I similarly believe that Marley Spoon has significant upside.

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Jnolan91
2 weeks ago

Thanks for your two cents man appreciate it and thanks for the clarity on the selling of shares!

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Jnolan91
2 weeks ago

I've been weighing up entering a position in Marley spoon for a while now, the growth of the company looks really good and they are also making waves overseas too. The current value of the company looks to be undervalued by about 50% fair market price. One of the reasons i was looking at buying is because i use the service regulary and the meals as well as the customer service and delivery is always top quality. One of the things i have noticed (from my very novice perspective) is that the shareholders have been diluted recenlty and the total outstanding shares are growing. I also discovered the founder just sold a bunch of his shares and his compensation has increased while the company is unprofitable. The final thing ive discovered which i hear can be a big no is the amount of institutional investment in the company which currently sits around 25% with private companies making up another 25%. Maybe i've answered my own question with the information ive put forward but as im still new to stock anaylsis a different perspective or opinion would be good.

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kingcash
2 weeks ago

Hi mate, 

I have been invested and followed this company for a while now, and thought it might be useful to give my two cents (alternatively check my straws for valuation and opinion).

MMM has been led by founder Fabien Siegal and has done an excellent job expanding the business and growing revenue. The business is now at a point where the Australian and US businesses are at roughly breakeven, with hope that the European arm will breakeven this year. We will wait for the next update on this one...

Marley Spoon is valued at a significant discount to larger competitor HelloFresh (for no real reason other then size?), but I suspect that if it delivers on its guidance, the stock may rerate. I also suspect that the market may be concerned about growth slowing as we emerge from COVID.

The company, as well as HelloFresh, have demonstrated that people are continuing to subscribe to their products, so I take the opposing view to the market and am quite bullish on the company's growth prospects going forward. The company thinks it can grow revenues to $5billion euro by 2030 which is quite lofty, but even if it misses (which I think it will), the company may be worth at least 10x what it is today. Refer to my valuation for my fair value estimate.

Risks include: customer retention, financing of growth, competition, economic conditions and more, but at this valuation of 1.5x sales, the risk reward proposition is certainly attractive for me.

Hope this helps.

Cheers

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kingcash
2 weeks ago

I would also encourage you to have a look at the nature of the update regarding Fabien selling, at first I thought he had disposed of his shares, but this was merely the employee trust selling down, the update saying, "Mr Siegel has not disposed of any CDIs held for his own benefit or otherwise personally benefitted from the above transactions."

Based off what I have seen, I am happy for him to have a payrise considering where this company may be going and how large it could get if he can continue to deliver these results. The total shares outstanding have increased as a result of oppurtunistic capital raises, but the company looks to be well capitalised (lots of cash), and should be cash flow positive very soon - meaning it won't need to dilute shareholders too much more, if at all.

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Chagsy
2 weeks ago

I have little to add other than Joe Magyar stayed "miserable unit economics" as a reason not to invest. 

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colinp
2 weeks ago

I am reasonably happy as a customer of Marley Spoon but I'm not enthused about it as an investment. The reason for that is that MMM has just a bit below a $1B enterprise value but doesn't seem likely to make a profit for another year or more. I can begrudgingly swallow those kind of metrics for a tech startup, but to me MMM is a food business and the food sector is historically defined as having a high volume/low margin path to profitability where you don't pay high multiples for pre-profitability.

Their ability to increase prices will forever be limited as they are competing both with other meal kit delivery companies as well as Coles/Woolies/etc. and I already feel like they might be in a margin-compressing 'race to the bottom' for customer retention as I seem to get discount offers semi-regularly from either Marley Spoon or Hello Fresh  and the products are near identical so I will usually buy from whomever's price is best.

For me the key question is do you believe MMM is a tech business, or do you think they're a modernised version of the local grocer from 50 years ago who used to deliver? I think MMM can be a successful business but I see them as a low-margin grocer rather than a tech unicorn, so I'd rather be a customer than an owner.

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elpaso96
2 weeks ago

Fair points on both sides. My 2cents is that they will most likely get acquired by Woolworths and I think that acquisition would work well for both companies. It just depends on what price Woolworths is willing to pay? Hence that’s one of the reasons why I am holding, albeit not a great reason but I only offering 2cents not 2 dollars :P 

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kingcash
a week ago

@colinp

Yeah thats a great point of view and I agree with most of the things you've pointed out. I think they are definitely trying to grow revenues quickly, and I do think that over time margins will innevitably decline, however, both HelloFresh and Marley Spoon have "budget" brands that play in this space, so I am confident that people will continue to pay up for the more "premium" meal kits. And, you are right they are competiting with coles and woolies - however, this interaction is more indirect in my opinion... especially since both companies derive a large amount of their revenues overseas, and Woolies has a strategic stake in Marley Spoon... We might see freshly packed meal kits being sold at woolies? Or an inclusion of Marley Spoon when you get your groceries delivered? Or maybe Woolies takeover Marley Spoon? Maybe nothing happens... but I'm not too concerned about losing revenue to the benefit of the big supermarkets.

The company has come out and said that customer acquisition costs have decreased, which is a positive sign for the business, however, there is no way of knowing it could stay this way, and I think these might increase again. Using both HelloFresh and Marley Spoon, I also believe that they might of. put up their prices up during COVID, but the increasing price of food might pose a problem for the business as well...

I'm not making a bet on customer acquisition costs, price of food, market share, my bet is on my belief that home delivered meal kits are likely to be more prevelant in future years, and I believe Marley Spoon are well placed to benefit from this shift. At the current share price - I believe it is a fairly attractive risk-reward proposition, however, I really wish I had've been in this one at March last year!!!  

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