Key insights
- Vital Farms' Q1 earnings disappointed, leading to a stock price drop. Adjusted EBITDA margins collapsed due to historically low egg prices, forcing price cuts. Full-year guidance was revised down for the third time. While brand awareness remains strong, the company faces a delayed timeline for recovery, with 2026 now seen as a reset year. The impact on the broader US market is limited, but it highlights the challenges consumer staples companies face from commodity price fluctuations.
Vital Farms dropped ~20% after yesterday's earnings report, reaching a new low of ~$8.50 a share, before recovering slightly to around $9.4 a share.
Two major points from their earnings stand out:
- Adjusted EBITDA margin collapsed to 2.7% * Full year 2026 guidance revised down for the third consecutive time, now projecting an Adjusted EBITDA floor of zero
Horrible numbers due to egg prices at historic lows. Commodity eggs are now selling for ~$2 a dozen at retail, compared to Vital Farms' ~$8. This huge price gap is evidently the limit of Vital Farms's pricing power, and they now have to cut prices to drive volume.
Despite that, brand awareness and household penetration remain strong. Their network added 25 more family farms just this quarter alone.
I still think it's undervalued, assuming egg prices normalise long term with no more management fuckups. But, the current macro has significantly delayed their timeline: 2026 is now a reset year instead of a buildout phase. It remains to be seen whether they will recover back to normal by 2027.
Happy to discuss, this is an interesting situation.
My full analysis and thoughts on this quarter: https://open.substack.com/pub/stefanliemawan/p/vital-farms-q1-2026-shit-numbers?r=2wzuop&utm_campaign=post&utm_medium=web&showWelcomeOnShare=true