ASX small-cap stock Bubs Australia Ltd (ASX: BUB) shares are sliding on Friday after the infant nutrition company released a FY26 trading update.
At the time of writing, the Bubs share price is down 3.19% to 9.1 cents.
Today's fall adds to a difficult recent run for shareholders. Bubs shares are now down around 17% over the past month and 34% in 2026.
The stock is also trading near the bottom of its 52-week range of 9.1 cents to 19 cents.
So, what has investors selling today?
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Guidance points to more pressure
According to the release, Bubs now expects FY26 revenue of $105 million to $115 million.
The company said this still shows underlying growth, but the market appears more focused on the headwinds sitting behind the update.
Reported EBITDA is expected to land between a $2 million loss and a $2 million profit. Underlying EBITDA is expected to be between $4 million and $8 million.
Sales and earnings have been hit by several external factors.
Bubs pointed to evolving regulatory requirements, product availability constraints, geopolitical disruption in the Middle East, higher air freight use, and competitive pressures.
The company is still growing, but getting product into the right markets has become more expensive and complicated.
The US remains the key market
Demand for Bubs products remains in place, with the United States continuing to be its strongest growth market.
Chief executive Joe Coote said the company has taken a careful approach to managing its supply chain in a more complex external environment.
He noted that Bubs has been using air freight to support restocking in the United States. That extra cost is now winding down as the company continues to prioritise customer service.
Bubs said it remains on track to achieve ranging in more than 10,000 stores in July 2026.
Wider distribution in the US gives the company a bigger addressable market, but it also raises the pressure to execute well.
Foolish takeaway
Bubs remains a small-cap consumer stock with a market capitalisation of about $82 million.
That can make the share price sensitive to any change in expectations, especially when investors are already nervous.
The company has a strong brand in infant nutrition and exposure to large offshore markets, including the US and China. But today's update shows growth is still coming with extra cost and operational risk.
The next test is whether Bubs can turn its wider US store footprint into stronger sales, while keeping a tighter hold on costs.
