NBEV released some great numbers today. Assets are up significantly, and so are sales.
With growth stocks raging, you’d expect more from this stock today. AVLR is trading 2000x forward P/E, and Crowdstrike is priced 86x times gross profit, with many more similar examples. It seems like every time a company announces growth, it doesn’t seem to matter how much debt they have, or how many times it trades above its book value; the only thing that seems to matter is the word growth, so what is wrong with NBEV?
At one point it was the hottest stock on the NASDAQ. Back in September of last year, the share price went up 100’s of percentage points in only 4 days, and everybody wanted a piece of it. Social media raging!
At the time, everybody was ecstatic about the legalization of marijuana in Canada, TLRY was the darling of the stock market, going from $42.00 to $300.00 in less than a month!
After NBEV crashed down to reality, notwithstanding the Morinda merger, there wasn’t much for notable material developments until April when they announced a nationwide distribution contract with Walmart, which was a huge development. The share price exploded 38% on heavy trading volume
“Craig Thibodeau, Vice President of Key Accounts for New Age stated, “This is such a great accomplishment for New Age to gain its first national distribution, and to do so with the world’s largest retailer in Walmart. This is just the first initiative that we expect to do with them on the Marley brand and other New Age products on which we are in active discussions. We know Walmart is equally as committed as New Age to providing healthier products for their customers, and we expect to make the full portfolio of New Age’s better-for-you products available as we expand the relationship.”
But after this, it got no attention. Puzzling isn’t it? Walmart; nationwide! Huge development… right? Yes? No? Maybe so? Seemed like it at the time though right? Take a look at this:
They entered into an agreement with an underwriter to sell $100 million worth of stock “at the market”, which means exactly what it says, sell as much stock as you can at whatever market price you can get. If you look at the snapshot below, you’ll see they have sold about 10% so far.
You can see how the price reacted
Also, they seem to be paying a lot of money in commissions. Apparently this is part of Morinda’s business model, but it still doesn’t look very good on the balance sheet. This could have been another reason why investors were turned off by today’s earnings report
NBEV has still made a lot of headway over the past 12 months though. Maybe all their followers left because they were so beaten up from all the volatility and disappointing price action, but it still looks like a great company.
That Marley drink should gain quite a bit of attention now that it’s available in Walmart stores, but the problem is just predicting when this will impact earnings. With roughly $90 million in stock hanging above every price rally, it seems hard to justify buying into them right now. We will have to wait and see how many funds bought in during the second quarter.
As of now, three have reported notable positions, and one of them is J.P Morgan. After completely liquidating their position in the first quarter, they repurchased 654,998 shares in the 2nd quarter. Definitely something to watch, but it might be safer to wait just a little bit longer.
FEEL FREE TO LEAVE COMMENTS!
All chart images courtesy tradingview