DavidsTea Inc (NASDAQ: DTEA) is having an overwhelmingly rough start to the trading session this morning after monumental gains were seen on the stock yesterday. The reason for the declines is that the company said it was unaware of any reason for the gains, further validating our opinion with regard to the rumors that led to the gains yesterday. Today, we’ll talk about:
- Why the stock is falling;
- what we’re seeing from DTEA; and
- what we’ll be watching for ahead.
As mentioned above, DavidsTea is having an overwhelmingly rough start to the trading session today after saying that it is unaware of any reason for yesterday’s gains. Nonetheless, we know the reaosn. Yesterday, rumors started to break that DTEA was interested in creating CBD-infused beverages. Of course, if this were the case, investor excitement wouldn’t be a surprise. After all, investor interest in the cannabis space is high at the moment.
Nonetheless, in our post yesterday, we pointed to the fact that the CEO of DTEA made it clear last week that no CBD-infused beverages were on the table as of yet. In fact, in the statement, it was made clear that the company is not ready for a partnership with a cannabis provider.
As news breaks today that the company is not aware of any reason for the gains, investors are starting to realize that yesterday’s rumors were just that, rumors. As a result, the excitement is fading and the stock is sinking.
What We’re Seeing From The Stock
One of the first lessons that we learn when we start to dig into the market is that the news leads to moves. In the case of DTEA, the news wasn’t good. Investors were hoping that the company would be coming up with a CBD-infused beverage. However, in light of today’s press release, it seems as though the rumors were invalid and that beverage isn’t coming down the line any time soon. So, it comes as no surprise to see that upset investors are sending the stock tumbling down. As is normally the case, our partners at Trade Ideas were the first to alert us to the declines. At the moment (8:53), DTEA is trading at $3.27 per share after a loss of $0.89 per share or 21.39% thus far today.
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What We’ll Be Watching For Ahead
Moving forward, the CNA Finance team will continue to keep a close eye on DTEA. In particular, we’re interested in following the story surrounding the company’s continued work to expand its portfolio of products. Maybe one day down the line, that portfolio will include CBD drinks, but that won’t be the case any time soon. Nonetheless, we’ll continue to follow the story closely and bring the news to you as it breaks!
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