What Happened?
Shares of avocado company Mission Produce (NASDAQ:AVO) fell 15.9% in the morning session after the company reported underwhelming first-quarter (fiscal 2025) results, as high expectations heading into the quarter made it difficult for the numbers to impress Wall Street. The key highlight for the quarter was strong revenue growth of 29%, driven by higher avocado prices and increased volume in the Marketing & Distribution segment. However there were supply challenges in Mexico, which could be made worse given the trade war. Overall, the quarter was solid, but cautious macroeconomic factors remained a concern.
The shares closed the day at $10.22, down 13.5% from previous close.
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What The Market Is Telling Us
Mission Produce’s shares are not very volatile and have only had 8 moves greater than 5% over the last year. Moves this big are rare for Mission Produce and indicate this news significantly impacted the market’s perception of the business.
The biggest move we wrote about over the last year was 6 months ago when the stock gained 22.8% on the news that the company reported second-quarter earnings that blew past analysts' revenue, adjusted EBITDA, and EPS expectations. Despite the difficult macro environment (including challenges in its farming operations in Peru due to poor growing conditions caused by El Niño and disruptions in Mexico), revenue grew 24% year on year, benefiting from a 36% increase in avocado prices. The improved pricing was reflected in profitability ratios as EBITDA grew by 49% year on year. It turned out that consumers might also be developing a sweet tooth for other fruit, as volumes in the mango category saw a 40% increase, with revenues doubling to $14 million.
Moving on, the company expected the top line to be affected by the issues in Peru, with avocado volumes projected to be flat to slightly lower than industry volumes in the fourth quarter. However, avocado prices were expected to remain elevated relative to the previous year, likely offsetting the anticipated volume decline. Overall, this was a solid quarter. Peer Calavo (CVGW) also had a constructive quarter.
Mission Produce is down 27.9% since the beginning of the year, and at $10.23 per share, it is trading 29.2% below its 52-week high of $14.45 from December 2024. Investors who bought $1,000 worth of Mission Produce’s shares at the IPO in September 2020 would now be looking at an investment worth $741.30.
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