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Why is the Bubs (ASX:BUB) share price leaping 7% on Tuesday?

Let’s further analyse.
The post Why is the Bubs (ASX:BUB) share price leaping 7% on Tuesday? appeared first on The Motley Fool Australia. –

The Bubs Australia Ltd (ASX: BUB) share price is set to finish today’s session strongly in the green.

Investors have bid shares in the goat milk infant formula company 7% higher.

By comparison, the broader S&P/ASX200 Index (ASX: XJO) has sunk more than 1.4% today.

So what’s been fuelling the Bubs share price?

What’s pushing the Bubs share price today?

Bubs has not released any price-sensitive news that could explain today’s bullish price action.

As a result, there are a few factors that could be pushing shares in the infant formula company higher.

Firstly, shares in fellow infant formula producer A2 Milk Company Ltd (ASX: A2M) have enjoyed a strong run recently.

As a result, sentiment towards the sector could be parlayed onto the Bubs share price.

Secondly, investors might have had a change in heart towards Bub’s recent news of expanding into the US.

Earlier this month the company announced plans to expand into the lucrative North American market.

The company’s formula products will be launched on both Walmart Inc‘s (NYSE: WMT) and Amazon.com, Inc.‘s (NASDAQ: AMZN) online stores.

Investors did not react to the news favourably, with the Bub share price sinking more than 9% on the day.

The company had flagged first shipment of products in its results presentation for FY21.  

How did Bub’s perform in FY21?

Late last month, shares in Bubs took a tumble following a disappointing full-year report.

The infant formula company posted a huge loss for FY21, with a 24% decline in revenue of $46.8 million.

The dour result was driven by a 44% decline in Australian sales to $20.4 million and a 17.5% decline in China sales to $10.47 million.

Other highlights from the company’s full-year report included;

Underlying EBITDA loss of $28.5 million
Statutory loss after tax of $74.7 million
Cash balance of $27.9 million

Part of the company’s loss for the full year was attributed to a $44.6 million non-cash impairment relating to the Nulac Foods cash generating unit.

Bubs noted that weaker sales, a $12.6 million inventory write down, and the sale of excess bulk powder attributed to a bloated operating loss.

Snapshot of the Bubs share price

Today has provided a brief reprieve for Bub’s shareholders.

Shares in the infant formula company have not had a great year, trading more than 39% lower since the start of 2021.

At the time of writing, the Bubs share price is poised to close today’s session more than 5% higher.

The company’s shares were up more than 11% earlier, having hit an intra-day high of 38 cents.

The post Why is the Bubs (ASX:BUB) share price leaping 7% on Tuesday? appeared first on The Motley Fool Australia.

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More reading

Bubs (ASX:BUB) share price down 9% in September despite upcoming US launch
Why Bubs, Harvey Norman, Mesoblast, & Regis shares are dropping

Bubs (ASX:BUB) share price sinks 7% after posting $74.7 million loss

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Motley Fool contributor Nikhil Gangaram owns shares of A2 Milk. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended Amazon. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended the following options: long January 2022 $1,920 calls on Amazon and short January 2022 $1,940 calls on Amazon. The Motley Fool Australia has recommended A2 Milk, Amazon, and BUBS AUST FPO. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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