What happened
Shares of agriculture tech start-up AppHarvest (APPH) had fallen 29% as of 1:40 p.m. EDT. The reason lies within the company's second-quarter 2021 earnings update. There was plenty of information to unpack from the report, but what ultimately led to the steep drop was an updated outlook for full-year 2021 revenue -- now set at an expected $7 million to $9 million, compared to $20 million to $25 million before.
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So what
As a reminder, AppHarvest is still a start-up and isn't a full-blown farming operation -- at least not yet. The slashing of annual guidance isn't going to make or break the company because either way it's going to operate at a loss this year. However, expected full-year adjusted EBITDA loss is now going to be within a range of $70 million to $75 million, worse than the previous guide for a loss of $48 million to $52 million.
After the post-earnings drubbing, AppHarvest is now trading lower than it did before its SPAC merger and is now valued at a market cap of just over $800 million.
Now what
To be fair, AppHarvest's new expectations are by design. The company wrapped up its growing season early so it can integrate new learnings into its operation and invest in new farms. Additionally, the company is also investing in the development of its "TechCo" subsidiary, developing controlled environment agriculture (CEA) solutions to improve its own farms, and then later sell these solutions to other companies in the CEA industry.
In a nutshell, AppHarvest wants to be like the Amazon Web Services (AWS) of the agriculture industry -- the highly profitable cloud computing arm of the e-commerce giant. It's going to be a very long-term project, but AppHarvest is making progress on this front by developing multiple farms that will produce tomatoes, lettuce, strawberries, and more. It has several new farms under construction and is already striking deals with other farming companies.
As of the end of June 2021, AppHarvest had $273 million in cash and equivalents and debt of $74.3 million. AppHarvest is a busy little CEA business, but it's still a somewhat speculative bet on the development of agriculture technology.
