What happened

Another trading day, another volatile session for New Age Beverages (NASDAQ:NBEV) stock. The company, which sells ready-to-drink tea, coffee, kombucha, and energy drinks, has seen its stock soar recently on the heels of an announcement that it was getting into beverages infused with cannabidiol (CBD).

But shares are taking a breather Monday: New Age Beverages stock fell as much as 19%. As of 1:50 p.m. EDT, the stock is down 15.9%.

A chalkboard sketch of a chart showing a stock price falling

Image source: Getty Images.

So what

Shares of New Age Beverages have seen lots of volatility lately as stocks of companies selling weed-related products have become all the rage. New Age Beverages, for instance, is up more than 300% in the past month -- and this includes its decline on Monday. Similarly, medical cannabis company Tilray has seen its shares surge about 465% over the past two months, and nearly 80% during the last thirty days.

New Age Beverages' sell-off on Monday makes sense. Not only does it follow a sharp run-up, but the overall stock market is declining Monday, with the Nasdaq Composite slipping more than one percent.

Now what

Monday's pullback is a good reminder for investors to avoid speculation. There's no telling where a trend-driven stock can go in the near term (or any stock, for that matter). In addition, when stocks like this are subject to volatility, their moves can be very large -- and can occur in both directions.

Investors should ignore speculation and focus on New Age Beverages' business fundamentals.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.