It’s a new age, alright. Cannabis is becoming more normalized and companies are already capitalizing. When it comes to New Age Beverages (NBEV) stock, Seeking Alpha blogger, Philaretos says he’s been down this road before, and it ends badly.
Among many reasons to be bearish on the stock, the blogger cites the biggest and most important one – CEO Brent Willis. Philaretos notes Willis previously ran COTT, XFIT, and ECIG, leaving them all in “shambles.”
Let’s look at the numbers. NBEV acquired Xing Tea, Premier Micronutrient, Coco Libre and Marley Beverage. Profits from each of these companies when operating independently, added up to approximately $83 million in revenue and NBEV expected to add around $20 million worth of revenue — but instead came up short. In 2018 the last twelve month’s revenue was $49 million, implying a 40% decline.
“EO, Brent Willis has a history of using aggressive accounting and overly optimistic guidance. If one refers to past presentations and conference calls, Willis has massively missed on revenue, gross margins, and cash flow. During the last call (Morinda Call), Brent claimed NBEV was EBITDA positive in 2017; however, the adjusted number included an asset sale ($8.79 million), without the sale EBITDA would have been negative in 2017. Willis failed to mention this atypical addition to operating performance during the call,” Philaretos says.
In addition to the negative vibes about the company’s leadership, Philaretus has another bone to pick. The blogger thinks NBEV is too weak to compete with larger companies that have greater resources and stronger brands. Additionally, the blogger predicts CBD-infused beverages are going to be delayed from going on the market and will be largely unsuccessful.
“NBEV’s brands are irrelevant and have been losing market share in all brand categories. According to our channel checks, the company’s “top” brands struggle to remain on shelves and compose a small percentage of national sales for coconut water, kombucha, tea, and RTD coffee. The debut of the CBD-infused beverages at the Las Vegas Launch party was unimpressive, in our opinion. Pictures from launch party show the “CBD product” being poured into red solo cups from clear bottles, inside what appears to be a hotel room (very amateurish),” the blogger explained.
However, analysts on the Street can’t seem to agree with Philaretos. TipRanks analytics finds out of 4 analysts, 3 are bullish and just 1 is sidelined. The consensus rating is a “Strong Buy” with a price target of $6.67. (See NBEV’s price targets and analyst ratings on TipRanks)