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Greggs (LSE:GRG) inventory fell off a cliff within the FTSE 250 in 2025. Certainly, in response to my knowledge supplier, solely 14 mid-cap shares out of 250 dropped by extra.
Nonetheless, Greggs additionally ends the 12 months because the UK’s most-shorted inventory. So, refined traders like hedge funds are betting that there will likely be extra ache forward for shareholders in 2026.
May Greggs crash once more? Let’s take a more in-depth take a look at what’s happening.
Already low cost
One factor Greggs has been hit by is falling like-for-like (LFL) gross sales over the previous 12 months. Whereas a part of that is certainly right down to the continuing cost-of-living disaster, that alone in all probability doesn’t clarify why it’s the UK’s most-shorted inventory.
In spite of everything, the ahead price-to-earnings (P/E) ratio is now lower than 13, a multi-year low. And whereas issues are robust, LFL gross sales have been up 1.5% within the third quarter, and administration reiterated full-year steerage (ie, no sudden deterioration).
So, there’s clearly one thing else happening right here, for my part. And I believe it may be summarised by the next quote from Morgan Stanley.
GLP-1 medication are reshaping the panorama for weight problems remedy and could also be influencing client habits, particularly round weight loss plan and alcohol. Their rising adoption could have far-reaching implications not just for particular person well being, but in addition for complete industries linked to meals and drinks.
Morgan Stanley, October 2025
Research counsel GLP-1 customers purchase fewer high-calorie, processed snack meals, particularly sugary treats. Processed meals and sugary snacks? That’s precisely the kind of factor that Greggs is legendary for.
Thousands and thousands extra folks within the UK are anticipated to take GLP-1 medicines like Mounjaro and Wegovy in future. If I have been a hedge fund on the lookout for a UK inventory to guess towards, based mostly on this pattern, I would definitely take into account Greggs. It was one cause why I offered it a 12 months in the past.
Every day capsules incoming
In the summertime, Greggs’ administration addressed these considerations, admitting the agency was adapting by rolling out extra protein-led choices and snacks (smaller parts).
Did brief sellers see this as a pink flag? An admission that Greggs’ core enterprise of high-calorie pastries is probably below menace?
In that case, then Novo Nordisk‘s recent announcement that a daily Wegovy pill has been approved by the FDA is only likely to add to their bearishness. It’s anticipated to launch in early January 2026, whereas rival Eli Lilly‘s model might be in the marketplace quickly after.
These GLP-1 capsules are set to be way more reasonably priced, increasing the overall addressable market considerably. And it’s probably they’ll be on these shores earlier than the top of 2026.
[An oral GLP-1 pill] is a game-changer for customers preferring capsules over injections. As extra oral remedies hit the cabinets, we anticipate person adoption to extend, broadening the attain of GLP-1 therapies.
Morgan Stanley
Might Greggs crash once more?
Clearly then, the rise of GLP-1s presents a theoretical danger to gross sales at Greggs. Nonetheless, folks nonetheless have to eat after they’re out and about on these medication, and I think gross sales will show much more sturdy long run than 2025’s share value efficiency suggests.
Given the low valuation, I don’t see one other crash on the horizon. Certainly, with a 4.1% dividend yield on supply, I really suppose Greggs is a contrarian inventory to contemplate shopping for at present ranges.
