Shares of New Age Beverages Corp. (NASDAQ: NBEV) were falling today in a correction following the stock's jump yesterday on news that it would launch a new lineup of cannabidiol-infused beverages. Shares of New Age skyrocketed 80% yesterday to $7.85, adding to gains from earlier in the week, as the company said Wednesday that it plans to unveil a range of CBD-infused beverages at the National Association of Convenience Stores show in Las Vegas from Oct. 7 to 10.
Continue Reading Below
New Age shares actually continued to gain this morning, peaking shortly after the market opened at $9.99, but then gave up gains along with much of the cannabis sector, and were trading down 18.6% as of 2:50 p.m. EDT, or down more than a third from their peak earlier in the trading session.
Shares of New Age, which makes ready-to-drink tea, coffee, kombucha, energy drinks, and other products, were trading at just $1.59 a week ago. The stock has soared 300% over the last week on extraordinarily high volume as rumors broke about the CBD drink launch and also that Coca-Cola might make a bid for the company.
At this point, the stock is trading at six times trailing sales and is still operating at a loss, meaning that there's plenty of investor optimism already baked into the stock.
Several other beverage companies have expressed interest in the cannabis market, including Constellation Brands, which spent $4 billion on a 38% stake in Canadian marijuana grower Canopy Growth, and Coca-Cola itself. New Age is still a small company with just $50 million in annual sales, so it doesn't have near the distribution reach of a business like Constellation or Coca-Cola. However, that means the company could be an attractive acquisition target if its CBD beverage launch is successful.
Keep an eye the stock during the Vegas conference in a couple of weeks. Until then, it should continue to be volatile, along with the rest of the cannabis sector.
10 stocks we like better than NEW AGE BEVERAGES COMWhen investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has quadrupled the market.*
David and Tom just revealed what they believe are the 10 best stocks for investors to buy right now... and NEW AGE BEVERAGES COM wasn't one of them! That's right -- they think these 10 stocks are even better buys.
Click here to learn about these picks!
*Stock Advisor returns as of August 6, 2018