Consumer Discretionary

Bubs baby formula deliveries to depart in June: Biden says shortage to persist for 2 more months

Thu 02 Jun 22, 10:16am (AEST)

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Key Points

  • Bubs infant formula set to depart on 9 and 11 June
  • US President Joe Biden warns that the shortage may persist for "a couple more months"
  • Out-of-stock levels at US retailers continues to surge

The first two deliveries of Bubs (ASX: BUB) infant formula is scheduled to depart from Melbourne Tullamarine Airport on 9 and 11 June as part of the Biden Administration’s Fourth ‘Operation Fly Formula’ Mission.

Bubs said that subsequent flights and logistics are being finalised to distribute a total of 1.25m tins to top US retailers in the coming weeks.

Baby formula shortage roundtable

Bubs CEO Kristy Carr participated in a roundtable discussion with President Joe Biden and other senior White House officials. Bubs said it was the only manufacturer from the Asia Pacific Region.

Biden discussed the actions his administration was taking to increase the production of infant formula in the US and speeding up imports through Operation Fly Formula. 

The President warned that it will take "a couple more months" until supply returns to normal.

“It was pleasing to hear that FDA regards safety as the highest priority, and Bubs satisfies those gold standards. We were also interested to learn that the Administration is seeking to understand the broader regulatory environment going forward,” commented Carr. 

Shortage intensifies

The average out-of-stock rate in the US has surpassed 70%, according to Datasembly, a real-time retail product information analytics company.

States including California, Missouri, Minnesota, Nevada, Montana, Louisiana, Arizona and Utah have reported out-of-stock rates of more than 80%.

This represents a sharp increase since the 43% out-of-stock rate reported for the week ending May 8.

Spare capacity available

Last week, Bubs said that its 100% owned, FDA registered production facility had the capacity of tripling its current 10m tins per annum production capacity.

Adding that the supply to existing Australia retailers and export markets will remain unchanged.

Liquidity events

The headlines about Bubs' FDA approval and infant formula deliveries rallied the stock as much as 75% on Monday.

However, the stock has been subject to aggressive profit taking in the last three sessions, down -32% from Monday highs of 86 cents.

Its interesting to note that Bubs' volume on Monday was 63.8m shares, compared to its 20-day average volume of just 5.7m.

The whole shortage situation, while bullish at face value, has created a very high stakes, volatile environment for the stock.

BUB 2022-06-02 09-50-16
Bub share price chart (Source: TradingView)


Written By

Kerry Sun

Finance Writer & Social Media

Kerry holds a Bachelor of Commerce from Monash University. He is an avid swing trader, focused on technical set ups and breakouts. Outside of writing and trading, Kerry is a big UFC fan, loves poker and training Muay Thai. Connect via LinkedIn or email.

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