Core Viewpoint - Freshpet Inc. is facing significant challenges despite some growth in retail presence and revenue, with a bearish outlook on its stock due to poor fundamentals and unrealistic market expectations [4][6][22]. Company Performance - Freshpet's revenue increased by 18% year-over-year in 1Q25, driven by a 15% volume gain and a 3% favorable price/mix [4]. - Adjusted EBITDA rose from $31 million in 1Q24 to $36 million in 1Q25, but this figure is considered misleading [5][7]. - The company missed earnings estimates in its 1Q25 report and lowered its full-year adjusted EBITDA guidance to $190-$210 million from a previous estimate of at least $210 million [6]. Financial Health - Freshpet has consistently burned cash, with negative free cash flow (FCF) annually since 2017 and in 34 of the last 36 quarters [12][13]. - Cumulatively, Freshpet has burned through $1.2 billion in FCF since 2019, which is 29% of its enterprise value [13]. - The company's total operating expenses averaged 106% of revenue over the last five years, increasing from 96% in 1Q24 to 104% in 1Q25 [10][11]. Market Position - Freshpet holds just over 1% market share in a pet food industry dominated by larger companies like Nestle and Mars, which together account for 61% of the market [17][18]. - The company faces competition from both large corporations and private label brands, making it difficult to gain market share [16][19]. Profitability Issues - Freshpet's net operating profit after tax (NOPAT) fell to -$10 million in 1Q25 from $9 million in 1Q24, indicating declining profitability [20]. - The company's return on invested capital (ROIC) decreased from a peak of 4% in 2024 to 2% in the TTM ending 1Q25 [20]. Valuation Concerns - The current stock price implies that Freshpet must grow profits at accelerated rates and capture significant market share, which is deemed unrealistic [22][23]. - To justify its price of approximately $80 per share, Freshpet would need to generate $11.7 billion in sales by 2034, which is 12 times its TTM sales [23]. - Alternative scenarios suggest a potential downside of 40% to 68% based on more realistic growth expectations [25][26]. Long-term Outlook - Freshpet's economic book value is estimated to be less than $1 per share, indicating that equity investors may not see significant returns [33].