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Why NewAge Stock Tanked Today

By Evan Niu, CFA - Feb 16, 2021 at 12:31PM

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The beverage maker reported preliminary results and announced a private placement.

What happened

Shares of NewAge (NBEV 4.24%) have tanked today, down by 10% as of 12 p.m. EST, after the company announced preliminary fourth-quarter earnings. NewAge also said that it's conducting a private placement to raise fresh capital.

So what

Revenue in the fourth quarter is expected to be approximately $90 million, which is well above the consensus estimate of $79.3 million. The consumer discretionary company, which makes a variety of beverages, expects gross margin to be in the range of 64% to 68%, with earnings before interest, taxes, depreciation, and amortization (EBITDA) of roughly breakeven. NewAge closed its merger with ARIIX during the quarter and has started to integrate the two companies.

Red stock chart going down

Image source: Getty Images.

"We are pleased that our anticipated fourth quarter revenue will be higher than we anticipated and significantly above expectations," CEO Brent Willis said in a statement. "We are seeing strong growth coming from our European and Americas regions and are also seeing renewed growth in Japan, our largest market."

Now what

NewAge has entered into agreements to sell 14.6 million shares at a price of $3.96 to investors through a private placement. The company expects the gross proceeds from the deal to be around $58 million before fees and offering expenses. As part of the deal, the investors will also receive warrants to purchase an additional 7.3 million shares at a strike price of $5 per share.

The company will report full financial results for the fourth quarter on March 16. Analysts are modeling for a net loss per share of $0.04.

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