Meal kit giant beats profit estimates, resulting in a 11% increase in HelloFresh's stock population.

• On Tuesday morning, HelloFresh's stock price increased by 11% to 5.90 euros, but later reversed course after reaching a high of 20% earlier in the trading session.
• The company's adjusted earnings before interest, tax, depreciation and amortization for the second quarter were 146.4 million euros, a 23.7% decrease from the previous year, but exceeded the analysts' forecast of 123 million euros.
• The ready-to-eat meal delivery business of the company experienced healthy growth, resulting in a boost.

On Tuesday, the stock price of a German meal kit company increased due to the company's announcement of better-than-expected profits in the second quarter and the growth of its ready-to-eat meals segment.

During morning trade, HelloFresh's stock price increased by up to 20%, but later dropped to a 11% increase, reaching a value of 5.90 euros ($6.44) as of 6:19 a.m. ET.

HelloFresh reported adjusted earnings before interest, tax, depreciation and amortization of 146.4 million euros in the three months ending on June 30, according to its earnings release Tuesday. Despite being down 23.7% from the same period last year, the figure surpassed the 123 million euros forecast of analysts surveyed by LSEG.

HelloFresh reported a 1.7% increase in quarterly revenues, reaching 1.95 billion euros.

The ready-to-eat meal delivery business of the company experienced a 50.2% year-on-year growth in the first half of 2024, contributing to its overall healthy performance and boosting its results.

As demand for HelloFresh's meal kits decreased after the easing of Covid-19 lockdowns in 2021, the company prioritized expanding into the ready-meal category.

In 2020, HelloFresh purchased Factor, a business that specializes in preparing ready-to-eat meals for delivery, for a maximum of $277 million in order to expand into the meal delivery market.

In the first half of 2024, the decline in order volumes for meal kit products was more than offset by the expansion of the ready meal category and the growth of average order values in North America and international markets.

In the second quarter of 2024, HelloFresh's group contribution margin decreased from 28.4% to 24.3%, due to the increase in production of ready-to-eat meals, which reduced overall sales costs.

In March, HelloFresh's stock price dropped by 42%, marking their worst performance to date, after the company failed to meet investor expectations with its 2024 earnings forecast.

UBS analysts stated that HelloFresh's outlook was "far worse" than anticipated, despite previously flagged risks.