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Why NewAge Stock Fell 11% Today

By Demitri Kalogeropoulos – Updated Nov 10, 2021 at 12:23PM

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Sales didn't meet expectations this quarter.

What happened

The stock of NewAge (NBEV -33.33%) fell hard on Wednesday, dropping 11% by 11:45 a.m. EST. The organic and health foods specialist announced third-quarter results that left investors wanting more.

So what

Sales were up 59% to $100 million in the period that ended in late September. Wall Street pros were expecting much faster gains, with sales rising to about $123 million. Revenue roughly doubled in the second quarter, after all.

NewAge also reported a larger net loss than expected.

A woman eating vegetables.

Image source: Getty Images.

Management suggested in a press release that the losses came from the company's continued focus on building a stronger growth profile. "This quarter we made investments in our system," CEO Brent Willis said, "launched new products, and unveiled new social selling tools and technology."

The company's adjusted earnings and gross profit margin both improved, executives noted. "We expect our future results to benefit substantially from all the actions we have taken," Willis said.

Now what

Yet Wall Street focused more on NewAge's slowing sales gains heading into the holiday shopping season. The company is in a good inventory position and isn't facing major supply chain issues right now.

However, investors are taking a wait-and-see approach to the stock as they look for signs that management's growth initiatives are helping accelerate sales gains and put the business on firmer financial footing.

The stock might remain volatile, with extra selling pressure, until those growth and profitability trends are clearly pointing in the right direction.

Demitri Kalogeropoulos 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.

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