New Age Beverages Corp (NASDAQ: NBEV) is having a rough start to the trading session this morning, and for good reason. The company proposed a public offering of common stock. Of course, offerings are always a concern for investors, but in the case of New Age Beverages, this offering is even more concerning than normal. Today, we’ll talk about:
- The offering;
- why this one is such a big deal;
- what we’re seeing from NBEV as a result; and
- what we’ll be watching for with regard to the stock ahead.
NBEV Announces Offering News
As mentioned above, New Age Beverages is having a bad start to the trading session in the pre-market hours this morning after proposing a public offering. The company said in a press release that it intends to offer shares of common stock for sale in an underwritten public offering.
NBEV said that the net proceeds gained through the offering will be used for general working capital and potential acquisitions. The company has not provided the actual size or terms of the offering.
Why This Offering Is Such A Big Deal
Offerings are never a good thing. They are a sign that the company’s financial position is a poor one and they lead to dilution, taking value from investors currently invested in the stock. However, this offering goes a bit further than that.
Recently, NBEV announced the launch of a new line of CBD-infused beverages. Since the announcement of the launch, the company has been relatively quiet. So, investors have been left to their own imaginations with regard to how successful the launch of these cannabis-infused drinks has been.
However, once New Age Beverages announced the offering, new fears emerged. After all, if the launch of the CBD-infused drinks went well, would the company really need to raise money through a dilutive transaction?
Ultimately, the announcement of the NBEV offering is more than just dilution ahead. It’s a sign that the company’s launch wasn’t nearly as successful as investors were hoping for.
What We’re Seeing From The Stock
As investors, one of the first lessons that we learn when we start to work in the market is that the news leads to moves. In the case of New Age Beverages, the news was anything but positive. Not only did the company announce a dilutive transaction, the announcement led to fears that the company’s figurative goose that lays the golden eggs is actually just laying normal eggs. CBD-infused beverages may not be going as well as expected. 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. Currently (8:32), NBEV is trading at $3.84 per share after a loss of $0.85 per share or 18.12% 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 NBEV. In particular, we’re interested in following the story surrounding the company’s offering. We’re also interested in learning about the launch of the CBD-infused beverages. While the offering is leading to assumptions that the launch isn’t going well, we know where assuming things can get us. So, we’ll watch for an update to validate this opinion. Nonetheless, we’ll continue to follow the story closely and bring the news to you as it breaks!