Eurofins Share Price - A risk indicator for Forensic Science in England and Wales
Eurofins Deep Dive pt 3 - stocks go up...... until they don't. It's a fugazi. Who cares what happened yesterday, no-one knows what will happen today and as for tommorrow.......
TL,DR
When times are good and share prices are rising, everyone loves you and no-one really asks too many questions, particularly if you keep making people rich. Boom time baby. But if a company never experiences bad times, how can we trust them to be able to handle them when they do?
Introduction
Firstly and most importantly, when I talk about share prices I take the Matthew McConnaughy approach, it’s all a fugazi, and like Matthew, I don’t know if Eurofins stock will go up, down, round in circles or sideways.
But I do know greed and fear when I see it, and there’s no better place to see that than in a chart of stock prices. So lets have a little look at Eurofins stock price over the years and see if we can learn anything at all.
1997-2012
Eurofins SE listed on the Euronext and opened in October 1997. Its share price opened at €0.22 per share. After a huge spike upwards in 2000 likely caused by the flow of money from global investors desperately moving their money out of dot-com stocks into anything that wasn’t a dot-com, investors really became interested in Eurofins from 2004. At this point there was likely enough data behind the business for investors to consider it safe to properly invest (or not). Eurofins had started a period of rapid growth, and investors love growth.
2004-2012 was extraordinary.
Very few stocks, if any, were immune from the global financial crisis of 2008 and Eurofins was no exception to that. As the world emerged from that and with it, investor’s confidence began to grow again, they were happy to re-invest in Eurofins by the end of 2010.
Overall Eurofins’ share price rose over 5000% over the fifteen-year period since its initial public offering (IPO), averaging almost 50% per year (arithmetic average). Its market capitalisation grew from around 20 million euros in 1997 to around 1.5 billion euros in 2012.
2012-2018
2012 -2018 incredible performance. Sooo greedy, buyers can’t buy the stock fast enough. Every dip in price was just an opportunity to buy more. The price didn’t look back until it hit €50 in 2018. Investors absolutely loved Eurofins. This from a 2017 report:
The key finding of this report is that Eurofins has shown the greatest total shareholder return of any company listed on a European exchange over 20 years.
Nothing short of a stellar performance.
But then, wow, greed turned to fear. Up the stairs, down the elevator.
Eurofins gave up 50% of its gains that it took 6 years to achieve in just over 12 months. Hello fear. Sentiment changed and there’s always a trigger.
Once again, like it was in 2000 and in 2008, this was a global issue, not a company specific one. Below are charts from the French stock market, and the US stock market, same time frame.
Eurofins competitors, Intertek and Bureau Veritas, similar story.
2019 -2024
There’s a lot to unpack in this period and a lot more going on behind the prices than meets the eye. There’s clearly an effect from Covid and it no doubt helped Eurofins that:
the world was screaming for laboratory Covid tests.
they were best placed to adapt the quickest and on a global scale
most other global businesses were under lock down and investors had limited options for their cash
the centre banks were printing money and money was cheap
But amongst all of that there are attacks from short sellers and a massive fund raising share issue by Eurofins which makes it really difficult to understand where precisely the company was headed prior to Covid and where it may likely go in the future.
Future posts will explore the world of short sellers in the Eurofins story, but first we need to provide some perspective about precisely how far they have come and also, how fast prices are falling. It is quite astonishing.
But there is a question of trust here. How do you measure the trustworthiness of a company? In 2024, in their advertisements for jobs in forensic science, Eurofins Forensic Services use this text:
In 2020, Eurofins generated total revenues of EUR € 5.4 billion, and has been among the best performing stocks in Europe over the past 20 years
Of course that’s factually correct, but given the chart above how does that make you feel about Eurofins? Are they to be trusted when times get tough?
Next up Eurofins in the UK, what’s the history, current footprint, just how well are their subsidiaries performing?