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Greggs (LSE:GRG) stock fell off a cliff in the FTSE 250 in 2025. Indeed, according to my data provider, only 14 mid-cap shares out of 250 dropped by more.
However, Greggs also ends the year as the UK’s most-shorted stock. So, sophisticated investors like hedge funds are betting that there will be more pain ahead for shareholders in 2026.
Might Greggs crash again? Let’s take a closer look at what’s going on.
Already cheap
One thing Greggs has been hit by is falling like-for-like (LFL) sales over the past year. While part of this is surely down to the ongoing cost-of-living crisis, that alone probably doesn’t explain why it’s the UK’s most-shorted stock.
After all, the forward price-to-earnings (P/E) ratio is now less than 13, a multi-year low. And while things are tough, LFL sales were up 1.5% in the third quarter, and management reiterated full-year guidance (ie, no sudden deterioration).
So, there’s clearly something else going on here, in my opinion. And I think it can be summarised by the following quote from Morgan Stanley.
GLP-1 drugs are reshaping the landscape for obesity treatment and may be influencing consumer habits, especially around diet and alcohol. Their growing adoption may have far-reaching implications not only for individual health, but also for entire industries connected to food and beverages.
Morgan Stanley, October 2025
Studies suggest GLP-1 users buy fewer high-calorie, processed snack foods, especially sugary treats. Processed food and sugary snacks? That is exactly the sort of thing that Greggs is famous for.
Millions more people in the UK are expected to take GLP-1 medications like Mounjaro and Wegovy in future. If I were a hedge fund looking for a UK stock to bet against, based on this trend, I would certainly consider Greggs. It was one reason why I sold it a year ago.
Daily pills incoming
In the summer, Greggs’ management addressed these concerns, admitting the firm was adapting by rolling out more protein-led options and snacks (smaller portions).
Did short sellers see this as a red flag? An admission that Greggs’ core business of high-calorie pastries is potentially under threat?
If so, 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 expected to launch in early January 2026, while rival Eli Lilly‘s version could be on the market soon after.
These GLP-1 pills are set to be much more affordable, expanding the total addressable market significantly. And it’s likely they’ll be on these shores before the end of 2026.
[An oral GLP-1 pill] is a game-changer for users who prefer pills over injections. As more oral treatments hit the shelves, we expect user adoption to increase, broadening the reach of GLP-1 therapies.
Morgan Stanley
Could Greggs crash again?
Clearly then, the rise of GLP-1s presents a theoretical risk to sales at Greggs. However, people still need to eat when they’re out and about on these drugs, and I suspect sales will prove far more durable long term than 2025’s share price performance suggests.
Given the low valuation, I don’t see another crash on the horizon. Indeed, with a 4.1% dividend yield on offer, I actually think Greggs is a contrarian stock to consider buying at current levels.
