The Wattle Health share price is down 60% in 2019 and at a two-year low

The Wattle Health Australia Ltd (ASX:WHA) share price has fallen significantly in 2019. Is this a buying opportunity?

| More on:
a woman

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The Wattle Health Australia Ltd (ASX: WHA) share price continued its poor run and dropped to a two-year low of 38 cents on Thursday.

This latest decline means the infant formula and health and wellness company's shares are down almost 60% since the start of the year.

Why has the Wattle Health share price crashed lower in 2019?

Investors have been heading to the exits in their droves this year after the company's financial performance underwhelmed the market.

Last year investors were fighting to get hold of its shares on the belief that Wattle Health could be the next A2 Milk Company Ltd (ASX: A2M) or Bellamy's Australia Ltd (ASX: BAL).

But at this stage this doesn't look likely to be the case. In fact, rather than growing sales, in FY 2019 the company reported a very disappointing decline in sales.

For the 12 months to June 30, Wattle Health reported a 42% decline in sales revenue to just $0.89 million. And on the bottom line the company posted a loss of $10.3 million. This means for every $1 of product it is selling, it is losing approximately $11.60.

In addition to this, the company signed an US$85 million debt facility term sheet Gramercy Funds Management to fund the acquisition of Victoria-based manufacturing and packing facility Blend and Pack.

Investors may be concerned with the sizeable debt the company is taking on, especially given how it has yet to prove that there is sufficient demand for its products from consumers.

Should you buy the dip?

Whilst things could still come good for Wattle Health, given how competitive the market is, I'm not overly confident that the company will turn things around in the near term.

In light of this, I would stick with the bigger players in this hyper competitive market or consider a small investment in the fledgling Bubs Australia Ltd (ASX: BUB).

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of A2 Milk. The Motley Fool Australia has recommended Bellamy's Australia and BUBS AUST FPO. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on 52-Week Lows

A man with his back to the camera holds his hands to his head as he looks to a jagged red line trending sharply downward representing the ASX tech share sell-off today
52-Week Lows

3 ASX shares sinking to 52-week lows today

These ASX shares are having a bit of a nightmare this year.

Read more »

Young man sitting at a table in front of a row of pokie machines staring intently at a laptop. looking at the Crown Resorts share price
52-Week Lows

Star Entertainment share price crashes 26% upon return to trade

This is a new 52-week low.

Read more »

Rede arrow on a stock market chart going down.
Materials Shares

Core Lithium and 2 other ASX 200 lithium shares plunging to 52-week lows

Lithium stocks like Core are exploring new lows today.

Read more »

A man looks nervous as he inflates a balloon, scared it might pop.
Materials Shares

Arafura share price resets 52-week low after quarterly update

The rare earths explorer also announced the results of its share purchase plan today.

Read more »

A woman stands at her desk looking a her phone with a panoramic view of the harbour bridge in the windows behind her with work colleagues in the background.
Industrials Shares

APM shares rebound on Friday following 40% thrashing on weaker profit news

The international employment services company was punished for its 1H FY24 update.

Read more »

Piggy bank sinking in water symbolising a record low share price.
52-Week Lows

3 ASX 200 stocks starting the new year at near 52-week lows

Are these stocks buying opportunities?

Read more »

A businesswoman ponders why her boat is sinking in the ocean.
52-Week Lows

Lake Resources share price falls 7% to new 52-week low amid second strike AGM vote

Chair Stu Crow described "a year of significant progress" amid an 80% decline in the share price in 2023.

Read more »

A man sits uncomfortably at his laptop computer in an outdoor location at a table with trees in the background as he clutches the back of his neck with a wincing look on his face.
Materials Shares

Why did the Core Lithium share price just hit a 2-year low?

Top broker Goldman Sachs says falling lithium commodity prices may hit Core Lithium particularly hard.

Read more »