That's very kind. The more I learn, the more I'm reminded how much I don't know. And despite trying to cut down that list a bit each day, it seems to grow and grow.
Thank you Devin as always. I share the view. Just a quick question where I dont have a deep knowledge. IF the pricing gap were to close, how much of additional GM % do you foresee to happen? To put a different way, what GM % you think are possible once Haypp gets to scale in maturing growth markets? Do you have any idea? Obviously one needs to assume, that they wont share the economies to consumers further.
It depends on who they would be closing against. Other online? Grocery? Convenience? There is a sizable gap vs physical retail, but I've disregarded considering the implications of Haypp closing the gap. While they could conceivably take incremental price over time as markets mature, it makes so much more sense to do the opposite due to a few main drivers:
1. No one can compete on price /w Haypp. Certain online outlines trying to compete are surely deeply negative and are still subscale.
2. Larger pricing differential drives people online and allows Haypp to convert and retain at higher rates, both driving volumes while limiting volume growth for competition.
3. Supplier rates are negotiated on calendar years based on prev year volumes. Rather than taking price to drive GM, Haypp can drive volumes and receive a step up in rates in each following year.
In Growth Markets, this leads to a much more defensible position for the company. GM can also steadily expand. We know NPs are higher contribution margin, that margin is higher in Growth Markets relative to Core, and Growth Markets are a higher % NP and are (as their name would have us assume) growing much faster. I have zero idea how pricing may come into the equation years down the road, but this route makes sense for what we see in front of us.
Thanks you for the update Devin! On April 15-16, two brokers, Carnegie and SEB Equities, cut their rating to “hold.” Do you have access to their research? I’m always interested in understanding the bear case of any investment.
I'll have to take a look! Though, I will say, I find it best to take such 'buy/sell/hold' recommendations with a large grain of salt. Nonetheless, I'm always eager to read counterarguments for anything I'm interested or invested in.
It's a pretty wild pop - but this company's stock has had quite a few similar moves up and down over the years. Looking forward to next update provided by the company. I am sure there are some interesting things in store.
Your subject knowledge on this stuff is aspirational.
That's very kind. The more I learn, the more I'm reminded how much I don't know. And despite trying to cut down that list a bit each day, it seems to grow and grow.
Thank you. I enjoy owning this company!
Thanks for reading!
Thank you Devin as always. I share the view. Just a quick question where I dont have a deep knowledge. IF the pricing gap were to close, how much of additional GM % do you foresee to happen? To put a different way, what GM % you think are possible once Haypp gets to scale in maturing growth markets? Do you have any idea? Obviously one needs to assume, that they wont share the economies to consumers further.
It depends on who they would be closing against. Other online? Grocery? Convenience? There is a sizable gap vs physical retail, but I've disregarded considering the implications of Haypp closing the gap. While they could conceivably take incremental price over time as markets mature, it makes so much more sense to do the opposite due to a few main drivers:
1. No one can compete on price /w Haypp. Certain online outlines trying to compete are surely deeply negative and are still subscale.
2. Larger pricing differential drives people online and allows Haypp to convert and retain at higher rates, both driving volumes while limiting volume growth for competition.
3. Supplier rates are negotiated on calendar years based on prev year volumes. Rather than taking price to drive GM, Haypp can drive volumes and receive a step up in rates in each following year.
In Growth Markets, this leads to a much more defensible position for the company. GM can also steadily expand. We know NPs are higher contribution margin, that margin is higher in Growth Markets relative to Core, and Growth Markets are a higher % NP and are (as their name would have us assume) growing much faster. I have zero idea how pricing may come into the equation years down the road, but this route makes sense for what we see in front of us.
I liked your interview with Andrew Walker. I don't own this one, and probably won't bother, even though I suspect it will do very well. thanks
Thanks, Christian. It was a ton of fun to chat with Andrew about the company.
For anyone else that is interested in listening:
https://www.yetanothervalueblog.com/p/devin-lasarres-thesis-on-haypp-group
Thanks you for the update Devin! On April 15-16, two brokers, Carnegie and SEB Equities, cut their rating to “hold.” Do you have access to their research? I’m always interested in understanding the bear case of any investment.
I'll have to take a look! Though, I will say, I find it best to take such 'buy/sell/hold' recommendations with a large grain of salt. Nonetheless, I'm always eager to read counterarguments for anything I'm interested or invested in.
Interesting to see how strong Haypp is trading on its first day as a member of the First North 25 Index...passive flows...link: https://hayppgroup.com/news/haypp-group-will-be-included-in-nasdaqs-first-north-25-index/
It's a pretty wild pop - but this company's stock has had quite a few similar moves up and down over the years. Looking forward to next update provided by the company. I am sure there are some interesting things in store.