New Age Beverages (NBEV) stock plunges to new 52-week low ahead of Q4 2019 earnings

New Age Beverages (NASDAQ: NBEV) is slated to release its fourth quarter and full-year 2019 results on Monday, March 16 before the market opens. Analysts estimate the Denver, Colorado-based firm to post a loss of $0.08 per share on revenue of $66.2 million for the fourth quarter.

In line with the broader US stock market’s poor performance, NBEV stock tanked to a new 52-week low ($1.23) during midday trading today. However, the stock bounced back and ended up 1.39% at $1.46 today.

The company’s cash burnout and delay in bringing CBD-infused beverages to the market are expected to impact the profitability in the just concluded quarter. Also, the coronavirus outbreak is estimated to hurt the New Age’s performance in the first quarter of 2020 and the full-year 2020.

Looking Back

For the third quarter ended September 30, 2019, New Age reported a more than four-folded increase in revenue. This robust revenue growth was mainly due to the strong performance in Morinda business, which contributed about 80% of the company’s total revenue in Q3. However, the topline fell short slightly from the Street’s estimates. The company’s loss of 8 cents per share in the third quarter also failed to beat the market’s projected loss of 4 cents per share.

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Q4 Outlook

For the fourth quarter, New Age had projected revenue to be in the range of $65 million to $70 million and breakeven EBITDA on an adjusted basis. During the third quarter earnings call, the company stated that beverage business will be seasonally abnormal in Q4 and on average, the business will be 20% below that of the summer season.

Morinda Business

New Age, which was rumored to be Coca Cola’s (NYSE: KO) takeover target in September 2018, combined with Morinda in December 2018. Morinda is a healthy lifestyle and beverage company with operations in more than 60 countries around the world, and manufacturing operations in Tahiti, Germany, Japan, the United States, and China.

Morinda is primarily a direct-to-consumer and e-commerce business with over 80% of its business generated in the key Asia Pacific markets of Japan, China, Korea, Taiwan, and Indonesia.

The majority of Morinda’s business is generated from the key Asia Pacific markets which include China, where the coronavirus outbreak started first. It’s worth noting that during the third quarter earnings call, New Age stated that Morinda had strong growth in China and Japan.

Reduced Demand

Demand for beverages had reduced a lot since the coronavirus outbreak worldwide, especially in the Asian countries, as people avoided visiting hotels and restaurants, traveling, and public gatherings. This reduction in demand for beverages is expected to continue in the near future and this will affect beverage companies’ performance including New Age Beverages.

NBEV stock had dropped 20% so far this year and 73% from this time last year.

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