Why New Age Beverages Stock Was Slammed Monday
What happened
Shares of New Age Beverages (NASDAQ: NBEV) took a hit on Monday, falling as much as 21.9%. As of 2:40 p.m. EDT, the stock was down 20.5%. The stock's decline can be explained by a broader sell-off of marijuana-related stocks on Monday.
New Age Beverages sells ready-to-drink tea, coffee, kombucha, and energy drinks, but it recently announced a product line of beverages infused with cannabidiol (CBD).
So what
Highlighting weakness in marijuana-related stocks on Monday, the marijuana-focused exchange-traded fund ETFMG Alternative Harvest ETF (NYSEMKT: MJ) fell about 10%. Other examples of marijuana-focused stocks to get slammed on Monday included medical cannabis companies Tilray (NASDAQ: TLRY) and Canopy Growth (NYSE: CGC) -- down 18% and 15%, respectively, as of 2:40 p.m. EDT.
The sector's decline follows a big run-up in weed stocks recently, as well as the legalization of recreational marijuana last week in Canada. The sector may simply be taking a breather after a big gain.
New Age Beverages' stock is up 108% in the past three months even when including Monday's decline.
Now what
The significant volatility in marijuana stocks recently shows why it's so difficult to predict where a stock can go in the near term. Investors should base their decisions on a company's underlying fundamentals so they can tune out noise and avoid short-term speculation.
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Daniel Sparks has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.