Short Sellers Circle HelloFresh Ahead of Q2 Earnings

2025-08-03

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HelloFresh Short Interest Climbs Ahead of Q2 2025 Earnings

Investors are closely watching HelloFresh SE (ETR: HFG) as the company approaches its Q2 2025 earnings announcement on August 14. One striking trend is the surge in short interest – the percentage of shares sold short – in the lead-up to this report. This analysis delves into how short interest in HelloFresh has evolved in recent weeks and months, the historical patterns around previous earnings releases, and the market sentiment driving these bearish bets. We’ll also compare the short interest dynamics to HelloFresh’s stock price performance, and explore why so many are betting against the meal-kit maker.

Short Interest at Elevated Levels Going into Q2 2025

HelloFresh currently stands as one of the most shorted stocks in Germany. As of early August 2025, approximately 8.8% of HelloFresh’s outstanding shares are sold short. This short interest level reflects a significant increase in bearish positioning over the past few months. In the last 30 days alone, the aggregate short position rose by about 1 percentage point (to 8.8% from roughly 7.8%).

Who is shorting HelloFresh? Public disclosures of large short positions (those above 0.5% of shares) reveal a roster of well-known hedge funds and asset managers. For example, recent filings show D.E. Shaw holding about 2.5% of HelloFresh’s shares short, Marshall Wace LLP another 2.4%, and BlackRock Investment Management (UK) about 1.9%. Several other funds hold smaller (but still significant) short positions in the 0.5%–0.8% range. This level of coordinated skepticism underscores the decidedly bearish sentiment surrounding the company in mid-2025.

Historical Short Interest Patterns Around Earnings

HelloFresh’s short interest has not only risen recently – it has a history of spiking around key earnings reports and company news. Short sellers have frequently targeted HelloFresh ahead of financial results, reflecting expectations of disappointing performance or guidance. A look at the past few earnings cycles illustrates this pattern:

  • Q2 2024 (reported August 2024): Going into the second-quarter 2024 earnings, HelloFresh was already heavily shorted – aggregated disclosed short positions were in the high single-digits (at times even breaching double digits) as a percentage of float. Bears were betting on continued post-pandemic struggles. Yet, in that instance, the company surprised to the upside: HelloFresh beat profit forecasts for Q2 2024, thanks to booming sales of its ready-to-eat meals, and the stock jumped nearly 16% in a single day. Shares closed up 15.9% to €6.26 on the earnings news, a sharp rally that inflicted a short squeeze on the bearish traders. This scenario showed that high short interest can amplify stock moves – in this case, shorts rushing to cover likely contributed to the size of the rally. Interestingly, even after that pop, HelloFresh remained one of the most shorted German stocks, indicating that many shorts held their conviction (some even re-entered at higher prices, as later disclosure data suggested). The stock’s bounce proved short-lived in the bigger picture, as we’ll see.

  • Q4 2024 / FY2024 results (reported March 2025): Short interest was again elevated leading into HelloFresh’s full-year 2024 earnings release in March. And this time, the bearish thesis was validated. In early March 2025, HelloFresh shocked the market with a profit warning and a bleak outlook for 2025, its second downward warning in five months. Management forecast that FY2025 revenue would decline by 3–8% (versus prior expectations of growth) even as it aimed for higher adjusted profits – a signal that growth was stalling. When results and guidance were announced, the stock plunged over 11% in one day. This collapse rewarded the short sellers handsomely. Analysts at Jefferies dryly noted that HelloFresh’s new guidance “disappointed on growth” even if it “positively surprised on AEBITDA (adjusted EBITDA)” – in other words, the market doubted that cost-cutting alone could compensate for fading sales momentum. The bearish crowd appeared to agree; there was little covering of shorts after this earnings drop. If anything, aggregate short interest stayed high or even grew in the aftermath, as the stock remained under pressure.

  • Other earnings events: The pattern of high short interest coinciding with volatile earnings reactions has held on other occasions as well. For instance, around Q3 2024 (late October 2024), short interest was elevated (HelloFresh was consistently among Germany’s top shorted names through last year), and the stock saw sizable swings on results news. Even for Q1 2025 (reported April 29, 2025), bearish positioning remained significant, though some shorts appeared to trim positions right before that release (perhaps to lock in profits from the post-March selloff). The Q1 results came on the heels of the March profit warning, so there were fewer surprises – HelloFresh’s stock reaction was more muted than other quarters. Nonetheless, the overarching trend is that short interest tends to ramp up ahead of HelloFresh earnings, reflecting traders positioning for negative surprises, and then often adjusts (down or up) after the fact depending on the outcome. The fact that HelloFresh has frequently underperformed expectations in recent years (with guidance cuts, slowing growth, etc.) has emboldened shorts to remain in these trades quarter after quarter.

It’s worth noting that HelloFresh short interest hasn’t only been high – at times it’s been exceptionally high by any standard. In the past couple of years, HelloFresh earned the unwelcome title of one of Europe’s most shorted stocks. At one point, the aggregate short positions disclosed (those above reporting thresholds) summed to roughly 12.5% of shares – an enormous bet against the company. (For context, anything above ~5% is usually considered very high short interest.) This peak occurred as HelloFresh’s pandemic-fueled growth story unraveled (around 2022–2023), and many hedge funds piled on to capitalize on the downtrend. While the short interest briefly dipped from those highs as some shorts took profits, it has resurged in 2024/2025 to the current ~9% range. The persistence of a large short overhang suggests that bearish investors, so far, remain convinced that HelloFresh’s challenges are not just transitory.

Market Sentiment and Reasons Behind the Bearish Bets

Why are so many investors betting against HelloFresh? The elevated short interest is being driven by a confluence of business performance issues, industry headwinds, and broader macro factors that have soured market sentiment toward the company. Below are the key reasons and context behind the bearish outlook:

  • Slowing Growth and Profit Warnings: Once a pandemic-era growth darling, HelloFresh’s fortunes have reversed sharply. The company has issued multiple profit warnings as growth stalled. Notably, in early 2024 HelloFresh stunned investors with its second profit warning in five months, citing weaker sales and higher costs – an announcement that sent the stock into a tailspin. Management’s guidance in March 2025 that revenue would actually decline in 2025 (after barely growing in 2024) confirmed fears that the business has hit a wall. Such warnings severely undermine investor confidence. Short sellers often jump on companies that over-promise and under-deliver, and HelloFresh’s guidance cuts have given them plenty of ammunition.

  • Post-Pandemic Demand Decline: HelloFresh experienced a massive boom during COVID-19 lockdowns – households stuck at home eagerly ordered meal kits, driving HelloFresh’s revenues and stock price to all-time highs. But that trend has since gone into reverse. As society reopened, HelloFresh has lost customers and seen demand for its core meal-kit subscriptions flatten or fall. In the first nine months of 2023 alone, the company lost over a million active subscribers, an exodus that management is struggling to replace. Consumers are dining out more or reverting to grocery shopping, and meal-kit services must compete harder to win business. This post-pandemic normalization has undercut HelloFresh’s growth narrative and is a fundamental reason shorts have been circling. Bears view HelloFresh as a pandemic fad that is now reckoning with churn and saturation in its customer base.

  • High Marketing Spending and Profitability Pressures: To try and revive growth, HelloFresh ramped up marketing and promotions – but this has come at the expense of profits. The company’s profit warnings highlighted surging marketing expenses and costs of scaling new initiatives (like ready-to-eat meals) as key reasons earnings have disappointed. Essentially, HelloFresh has had to spend heavily to acquire and retain customers, squeezing margins. Its adjusted EBITDA fell in 2024 despite revenue being roughly flat. Short sellers are often drawn to companies with such deteriorating margins, suspecting the business model may be unsustainable if high spending is needed just to tread water. Until HelloFresh can demonstrate profitable growth (or at least stability) without exorbitant marketing outlays, skeptics will remain.

  • Competitive and Industry Challenges: The meal-kit space is competitive and evolving, which adds to the uncertainty. Alternative food options – from restaurant delivery (DoorDash, etc.) to ready-made meals in supermarkets – crowd the market. HelloFresh’s push into ready-to-eat (RTE) meals is an attempt to find new growth, but analysts are unsure if it can offset the meal-kit decline. There’s also caution given differing consumer habits by region (RTE meals are popular in the U.S., but perhaps less so in parts of Europe). The fate of HelloFresh’s U.S. peer Blue Apron is a cautionary tale: once a market leader, Blue Apron struggled with customer losses and was ultimately sold for a fraction of its peak value. (Blue Apron’s valuation collapsed from ~$1.9 billion at IPO to just $103 million in the 2023 buyout.) This illustrates the difficulty of achieving sustainable profits in this industry. Bears argue that HelloFresh could face a similar struggle if it cannot reignite growth – a grim scenario that justifies taking a short position.

  • Macroeconomic Factors: Broader economic conditions have also influenced sentiment. High inflation in food and essentials means consumers are tightening their wallets, potentially making discretionary services like meal kits less attractive. Additionally, HelloFresh earns about 60% of its revenue in the United States, which introduces currency and trade-related risks. In fact, J.P. Morgan downgraded HelloFresh in April 2025 partly because of its heavy U.S. exposure, warning that tariff uncertainties and a cloudy macro outlook in the U.S. could hurt HelloFresh’s performance. The specter of higher ingredient costs, supply chain disruptions, or economic slowdown in its key markets adds another layer of risk that short sellers find compelling. Essentially, the macro backdrop – from inflation to trade policy – has been unforgiving for HelloFresh, and bearish investors are positioning for those pressures to continue.

  • Valuation and Investor Sentiment: After the stock’s dramatic decline (discussed below), HelloFresh might appear “cheap” by some metrics, but many investors remain skeptical that a meaningful turnaround is near. The company has yet to prove it can grow again or even maintain stable revenues without heavy spending. Some analysts have adopted a wait-and-see stance – for example, Jefferies currently rates the stock a Hold/Market-Perform, citing fragile confidence in HelloFresh’s strategy until growth stabilizes. In general, sentiment in forums and commentary suggests that HelloFresh needs to restore credibility with investors. The fact that management stopped disclosing certain metrics (like active customer count) during turbulent times upset analysts, feeding a narrative of opacity. All this weighs on the stock’s sentiment, providing fertile ground for shorts who believe the shares could have further to fall. In short, trust in the company’s trajectory is low, which is exactly the scenario in which short sellers thrive.

 

Conclusion: High Stakes into the Q2 Announcement

As HelloFresh approaches its Q2 2025 earnings announcement on August 14, the company finds itself under a cloud of skepticism. Short interest remains extremely high at nearly 9% of float, reflecting a consensus among many investors that the stock still has downside or that any good news will be fleeting. This level of bearish positioning means the stakes are high for the earnings release: if HelloFresh disappoints (e.g. weak Q2 results or cautious guidance for the rest of 2025), the already emboldened shorts may add to their positions, potentially pushing the stock lower. On the other hand, if HelloFresh can beat expectations or show tangible improvement in its metrics, it could spark a significant short-covering rally given how crowded the short trade is – much like the rebound seen after the Q2 2024 surprise.

From a broader perspective, HelloFresh’s elevated short interest encapsulates the market’s current sentiment: “prove it to us.” Investors are looking for signs that the company can overcome its growth challenges and justify a turnaround, while a cadre of well-informed short sellers are betting against that outcome. The next earnings call will be a crucial update on which side of the bet is right. For followers of short interest dynamics, HelloFresh is a case study in how quickly fortunes can change – both for the company and those wagering on its future. All eyes will be on August 14 to see whether HelloFresh can serve up results that force shorts to cover, or if the bears will feast once again on an earnings letdown.