What happened
Shares of AmeriCold Realty Trust (COLD -0.17%) were trading down by nearly 11% on the week as of Friday morning after the company updated its guidance and an analyst named the company as a new short-selling idea.
So what
On Tuesday, the real estate investment trust (REIT), which owns and operates temperature-controlled warehouses, cut its 2021 guidance. In a press release, management said that labor disruptions in the food industry are impacting occupancy levels in its warehouses, and noted that its own labor costs are rising. As a result, AmeriCold dialed back its forecast range for estimated adjusted funds from operations per share for the year -- previously $1.34 to $1.40 -- to a range of $1.15 to $1.20.
On the same day, Hedgeye analyst Rob Simone added the REIT to his list of short ideas, saying he thinks its stock price is likely to decline.
"COLD announced a 15% reduction to FY21 AFFO guidance on significantly higher labor costs," Simone said in his research note. "Labor represents ~66% of COLD's cost structure within the same-store pool, and we see significant downside risk to FY22 estimates as well as 20% downside risk in shares to the mid-to-high $20/share range with limited upside from here."
Image source: Getty Images.
Now what
Unfortunately, global supply chain issues and difficulties in the labor market are pervasive problems right now, and it's unclear when or if things will get back to normal. Conditions in the job market might improve for employers as the federal government's pandemic stimulus runs off people's balance sheets, and now that enhanced unemployment benefits are ending.
But it could take some time, and conditions may not ever return to the way they were prior to the pandemic. We're living in a new world, which is why Simone's short call is certainly worth taking seriously.