Dive Brief:
- Hampton Creek's buyback program may be larger than was previously uncovered — in some cases higher than sales for the pay period, according to the latest findings from a Bloomberg investigation.
- While Hampton Creek CEO Josh Tetrick claimed the buyback program totaled $77,000, Bloomberg found that the buybacks were hidden in various places on the profit and loss sheet. One line item called "Inventory Consumed for Samples and Internal Testing" totaled about $1.4 million over five months, while net sales in the same period were $1.7 million.
- Bloomberg also learned that high-profile investor Ali Partovi had confronted Tetrick about the practices, saying the company was being misrepresented to investors and that this could risk claims of fraud.
Dive Insight:
Bloomberg's investigation has turned the perception of Hampton Creek on its head. Once a darling of Silicon Valley, now the company is facing a DOJ investigation and could potentially be accused of fraud.
Hampton Creek has been very successful in securing investments, but is also cautionary tale for startups that fail to deliver on sales to expenses ratio. Hampton Creek's reputation may have taken a drastic turn, though it would be more reliable to look at the sales data that will arise in the coming months to be sure. The legal ramifications and expenses, not to mention the negative public relations will keep Hampton Creek in the red and in the spotlight.