Farmmi Announces Yet Another Dilutive Offering

What happened

Farmmi disclosed a proposed public offering of Class A ordinary shares, with proceeds earmarked for general corporate and working capital needs. This follows a consistent pattern of equity issuance that has eroded per-share value despite multiple reverse stock splits. The company's core trading business continues to deteriorate, with H1 FY25 revenue down 56% year-over-year and the U.S. logistics segment still immaterial. This offering reinforces our view that management lacks a viable path to profitability and instead relies on dilution to fund operations. The bear case, which we assign a 50% probability, is playing out: counterparties underperform, logistics contracts fail to materialize, and cash burn forces further capital raises.

Implication

This offering underscores the structural reliance on dilutive financing to sustain the U.S. logistics expansion. Without visible logistics revenue or margin growth, per-share value will continue to be transferred from existing shareholders to new capital providers. We maintain our Strong Sell rating with a bear-case target of $0.80.

Thesis delta

The announcement crystallizes the bear case: management is again turning to dilutive equity to fund losses and the U.S. build-out, rather than generating operating cash flow or securing non-dilutive financing. This extends the runway for the logistics ramp but at a higher share count, reducing any potential per-share upside if the pivot eventually succeeds. The strong sell thesis is reinforced, and we see no reason to change our rating or conviction.