Please ensure Javascript is enabled for purposes of website accessibility

Why New Age Beverages Stock Is Falling Today

By Keith Speights – Apr 9, 2019 at 12:19PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The euphoria from yesterday's good news appears to be fading somewhat for the beverage maker.

What happened

Shares of New Age Beverages (NBEV 400.00%) were down by 7.4% as of 11:50 a.m. EDT on Tuesday after dropping as much as 13.3% earlier in the session. The company didn't announce any new developments. However, some investors appeared to be taking profits -- and thereby creating selling pressure on the shares -- after New Age Beverage stock jumped on Monday following the company's announcement that it expanded its distribution agreement with Walmart for its Marley Mate brand of beverages.

So what

Today's drop for New Age Beverages needs to be taken into context. The stock soared more than 30% yesterday. Giving up some of those gains shouldn't be concerning.

Shopping cart in a grocery store aisle

Image source: Getty Images.

The most important thing for investors is that New Age Beverages' business prospects appear to be better than ever thanks to the expanded Walmart deal. New Age said that its Marley Mate products will be on Walmart stores' shelves this month.

This could be just the beginning. Craig Thibodeau, New Age Beverages' vice president of key accounts, said, "This is just the first initiative that we expect to do with [Walmart] on the Marley brand and other New Age products on which we are in active discussions." Thibodeau added that New Age expects more of its health-focused products will be available in Walmart stores as the relationship between the two companies continues to expand.

Now what

Marley Mate was a key driver of New Age's sales growth last year. With Walmart selling the products, it seems reasonable to expect even stronger growth in 2019. But New Age must deliver on the great opportunity that the expanded relationship with Walmart presents.

In the meantime, investors can probably expect significant volatility for the stock. New Age Beverages still isn't profitable. Its valuation hinges on strong growth. Any bump in the road could cause speculative traders to sell their shares. But long-term investors who are convinced that the company will achieve its potential can ignore the volatility and focus on New Age's underlying business.

Keith Speights 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.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.