Why the Marley Spoon (ASX:MMM) share price is crashing 17% lower today

The Marley Spoon AG (ASX:MMM) share price is crashing lower on Monday after returning from its trading halt…

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The Marley Spoon AG (ASX: MMM) share price has returned from its trading halt on Monday and is crashing lower.

In early trade the subscription-based meal kit provider’s shares are down 17.5% to $2.88.

Why was the Marley Spoon share price in a trading halt?

Marley Spoon requested a trading halt at the end of last week whilst it launched a fully underwritten placement to institutional investors.

This morning the company revealed that it has successfully completed its placement, raising $56 million at a price of $3.22 per share. This represents a discount of 7.7% to its last close price.

According to the release, the placement was oversubscribed with strong support from domestic and international institutional investors. This includes both existing securityholders and new investors.

Marley Spoon raised the funds to accelerate its global growth strategy with a strong balance sheet.

Proceeds from the placement will also be used to fund investments into infrastructure to service growth, invest into the growth of the customer base at attractive unit economics, and increase working capital.

Management commented: “Given the continued traction in online meal kit adoption and strong recent business performance, Marley Spoon considers it appropriate to improve its balance sheet and access additional growth capital. With additional balance sheet flexibility, Marley Spoon will be well positioned to accelerate its global growth strategy and capitalise on the opportunities available in its core markets.”

How is Marley Spoon performing?

This placement was announced in conjunction with its third quarter update last week. That update revealed that Marley Spoon achieved revenue of 69.3 million euros for the three months ended 30 September. This was up 109% on the prior corresponding period.

The key driver of its growth was its US operations. They reported revenue of 34.2 million euros, up 163% in constant currency terms. Supporting its growth were its Australia and Europe businesses. Australian revenue rose 84% to 25.3 million euros and European revenue jumped 83% to 9.8 million euros.

At the end of the period, Marley Spoon had a total of 362,000 active customers, up 86% year on year.

While this is strong year on year growth, it is actually only up 3% quarter on quarter. I suspect investors may be concerned that its growth is close to peaking. This could be the reason why its shares are under significant pressure today.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. 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.

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