Vital Farms Inc. says that its mission is to bring ethical food to the table. The $1.6B company does this by selling pasture-raised eggs and butter in over 24 000 retail stores. But its 2020 IPO at $35 a share can easily be described as a disaster for investors. By mid-2022, the price had fallen 77% to just $8. Then, seemingly out of nowhere, the stock began climbing sharply in the first half of 2024, reaching a new record of $48.41 in July.
The second half of the year, however, has been different. Currently at $35.44, Vital Farms is down 27% from its all-time high. The question is, should investors buy this dip or brace for more weakness? The Elliott Wave chart below gives us a hint.
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The stock’s 4h chart shows that the uptrend since mid-2022 can be seen as an almost complete five-wave impulse. Waves 1-through-4 are in place already and wave 5 appears to be in progress. The five-wave structure of wave 3 is also visible and marked i-ii-iii-iv-v. Wave 4 is a clear three-wave correction down to $28 a share.
If this count is correct, we can expect a new all-time high in wave 5 going forward. Upside targets above $50 make sense, which translates into a roughly 50% gain from the current level going forward. On the other hand, once the bulls get there, the impulse from $7.89 a share in 2022 would be complete. According to the theory, a three-wave correction should follow, erasing the entire fifth wave.
Not to mention that even based on 2025 earnings estimates, Vital Farms stock trades at a P/E of nearly 30. At $50 a share, the ratio would’ve expanded to over 40. Both indicate extreme optimism on the part of investors. With that in mind, a return to $25 would feel reasonable.
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