What happened 

Shares of indoor farming stock AppHarvest (APPH) had jumped as much as 23.9% in trading on Thursday after the company reported earnings. Shares were near their daily highs at 2:20 p.m. EST. 

So what

AppHarvest reported $543,000 in sales for the third quarter of 2021 and a net loss of $17.3 million, or $0.17 per share. That loss included a $15.8 million gain on private warrants; loss from operations was $32.3 million.

Vegetables growing indoors.

Image source: Getty Images.

Management did reiterate an expectation of selling $7 million to $9 million of product in 2021 with an adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) loss of $70 million to $75 million. 

It also said that three indoor farms are under construction and management expects to have 12 farms by the end of 2025. 

Now what

The bounce in shares today looks big, but keep in mind that shares were trading near their all-time low before earnings were announced. The reality is that AppHarvest is a long way from being sustainably profitable and will have to improve revenue dramatically to get there. This looks a little more like a stock with high volatility near its lows rather than a company that's getting stronger financially. Until we see margins and cash flow improve, this isn't a stock I will be very bullish on.