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Reed's Inc (REED)
OTHER OTC:REED
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Reed's
(OTC:REED)
36Underperform
Reed's (REED) vs. S&P 500 (SPY)
Market Cap
$64.43M
Dividend YieldN/A
Average Volume (3M)4.26K
Price to Earnings (P/E)―
Beta (1Y)-0.55
Revenue Growth-16.95%
EPS Growth26.58%
CountryUS
Employees21
SectorConsumer Defensive
Sector Strength67
IndustryBeverages - Non-Alcoholic
Share Statistics
EPS (TTM)-2.22
Shares Outstanding45,371,246
10 Day Avg. Volume3,366
30 Day Avg. Volume4,260
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)0.27
Price to Cash Flow (P/CF)2.50
P/FCF Ratio0.60
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$1.75Price Target Upside25.90% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering1
Reed's Business Overview & Revenue Model
Company DescriptionReed's Inc. (REED) is a leading producer of natural and handcrafted beverages, primarily known for its premium ginger beer and ginger candy products. The company operates within the food and beverage sector, focusing on delivering high-quality, all-natural and innovative beverages to health-conscious consumers. Reed's emphasizes the use of real ginger and other natural ingredients in its product offerings, which include a variety of ginger beers, ginger ales, and other specialty drinks.
How the Company Makes MoneyReed's Inc. generates revenue primarily through the sale of its beverage products to retailers, distributors, and directly to consumers. The company utilizes a multi-channel distribution strategy, which includes grocery stores, specialty and natural food retailers, convenience stores, and online platforms. Key revenue streams include wholesale sales to distributors, direct sales to retail outlets, and online sales through the company's e-commerce platform. Strategic partnerships with major retail chains boost product visibility and availability, contributing significantly to Reed's earnings. Additionally, the company's focus on innovative and health-oriented beverages allows it to tap into the growing demand for natural and organic products, further driving sales and revenue growth.
Reed's Financial Statement Overview
Summary
Reed's financial performance is severely challenged, with declining revenues, significant profitability issues, and a weak balance sheet characterized by negative equity and persistent cash outflows. These factors indicate high financial risk and instability.Income Statement
Reed's demonstrates declining revenue and persistent losses. The TTM (Trailing-Twelve-Months) revenue decreased by 10.72% from the previous year, indicating a negative growth trajectory. The gross profit margin is low at 22.37%, while the net profit margin is negative at -39.16%, showing significant profitability challenges. Negative EBIT and EBITDA margins further highlight operating inefficiencies.35
Negative
Balance Sheet
Reed's balance sheet shows financial instability with a negative equity position of -21.95 million. The debt-to-equity ratio is not applicable due to negative equity, signaling financial distress. The equity ratio is also negative, reflecting more liabilities than assets, posing a solvency risk.25
Negative
Cash Flow
The cash flow statement highlights substantial cash outflows with negative operating cash flow of -2.44 million. While the free cash flow has improved, it remains negative at -2.50 million. The operating cash flow to net income ratio is 0.16, showing minor efficiency in converting income to cash.40
Negative
| Breakdown | |||||
| TTM | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 | Dec 2019 |
|---|---|---|---|---|---|
| Income Statement | Total Revenue | ||||
| 39.91M | 44.71M | 53.04M | 49.60M | 41.62M | 33.82M | Gross Profit |
| 8.93M | 9.71M | 12.11M | 13.60M | 12.77M | 7.88M | EBIT |
| -9.41M | -9.42M | -13.99M | -15.97M | -8.62M | -14.90M | EBITDA |
| -9.13M | -9.28M | -14.73M | -14.96M | -8.67M | -14.67M | Net Income Common Stockholders |
| -15.63M | -15.52M | -19.11M | -17.60M | -11.48M | -17.40M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | ||||
| 624.00K | 603.00K | 533.00K | 49.00K | 595.00K | 913.00K | Total Assets |
| 12.49M | 18.88M | 26.32M | 26.32M | 20.06M | 15.99M | Total Debt |
| 11.99M | 27.58M | 21.89M | 10.78M | 1.46M | 8.65M | Net Debt |
| 11.37M | 26.97M | 21.36M | 10.73M | 860.00K | 7.74M | Total Liabilities |
| 19.23M | 38.06M | 33.96M | 22.12M | 9.65M | 14.85M | Stockholders Equity |
| -6.74M | -19.18M | -7.63M | 4.20M | 10.40M | 1.15M |
| Cash Flow | Free Cash Flow | ||||
| -2.50M | -4.35M | -15.44M | -17.92M | -9.66M | -18.48M | Operating Cash Flow |
| -2.44M | -4.27M | -15.43M | -17.59M | -9.50M | -18.16M | Investing Cash Flow |
| -61.00K | -20.00K | -2.00K | -335.00K | -161.00K | -277.00K | Financing Cash Flow |
| 1.80M | 4.36M | 15.92M | 17.38M | 9.34M | 18.73M |
Reed's Technical Analysis
Positive
1.39
Price Trends
1.28
Positive
1.05
Positive
1.22
Positive
Market Momentum
0.03
Positive
52.27
Neutral
46.83
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For REED, the sentiment is Positive. The current price of 1.39 is above the 20-day moving average (MA) of 1.39, above the 50-day MA of 1.28, and above the 200-day MA of 1.22, indicating a bullish trend. The MACD of 0.03 indicates Positive momentum. The RSI at 52.27 is Neutral, neither overbought nor oversold. The STOCH value of 46.83 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for REED.
Reed's Risk Analysis
Reed's disclosed 28 risk factors in its most recent earnings report. Reed's reported the most risks in the “Legal & Regulatory” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Reed's Peers Comparison
Overall Rating
UnderperformOutperform
Sector (62)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
74 Outperform | $8.29B | 78.89 | 12.54% | ― | 2.85% | -43.53% | |
73 Outperform | $304.43B | 28.45 | 41.86% | 2.77% | 1.96% | -0.45% | |
69 Neutral | $3.76B | 20.41 | 40.81% | ― | 0.34% | 9.48% | |
62 Neutral | $20.55B | 13.83 | -10.11% | 7.30% | 1.62% | 5.62% | |
52 Neutral | $156.57M | ― | -25.77% | ― | -6.83% | 19.09% | |
48 Neutral | $24.92M | ― | -87.45% | ― | 17.44% | -33.47% | |
36 Underperform | $64.43M | ― | 71.20% | ― | -16.95% | 26.58% |
* Consumer Defensive Sector Average
Performance Comparison
REED
Reed's
1.39
-0.24
-14.72%
KO
Coca-Cola
70.74
11.34
19.09%
JSDA
Jones Soda
0.22
0.00
0.00%
FIZZ
National Beverage
41.38
-2.91
-6.57%
CELH
Celsius Holdings
35.15
-47.77
-57.61%
ZVIA
Zevia PBC
2.13
0.96
82.05%
Reed's Earnings Call Summary
Earnings Call Date: Mar 25, 2025 | % Change Since: 2.96% | Next Earnings Date: May 19, 2025
Earnings Call Sentiment Neutral
The earnings call highlighted significant strategic initiatives and operational improvements, including a successful private placement and the launch of a new product line. However, these positives were offset by declines in net sales, increased operating expenses, and negative EBITDA, reflecting ongoing financial challenges.Highlights
Strategic Initiatives for Long-term Success
Reed's implemented strategic initiatives to strengthen financial and operational foundations, positioning the company for long-term success with streamlined operations and enhanced efficiencies.
Successful Completion of $10 Million Private Placement
A $10 million private placement was completed, providing enhanced financial flexibility and enabling optimal inventory levels to meet customer demand.
Launch of New Multifunctional Soda Line
Reed's launched a new multifunctional soda line with organic ginger, adaptogen mushroom extracts, and prebiotic fiber, securing over 8,000 points of distribution.
Gross Margin Improvement
Gross margin improved to 30% in Q4 2024 from 4% in the year-ago quarter, driven by cost optimization and supply chain improvements.
Reduction in Delivery and Handling Costs
Delivery and handling costs were reduced by 10% in Q4 2024, contributing to improved operational efficiency.
Strengthened Leadership Team
Appointment of Douglas McCurdy as CFO and Salvatorre Vassallo as VP of Operations to drive financial management and supply chain optimization.
Lowlights
Decline in Net Sales
Net sales for Q4 2024 were $9.7 million, down from $11.7 million in the year-ago quarter, primarily due to short order shipments from inventory constraints.
Increased Operating Expenses
Operating expenses increased to $6.6 million in Q4 2024 from $5.4 million in the year-ago period, impacting overall profitability.
Negative Modified EBITDA
Modified EBITDA was negative $0.7 million in Q4 2024 compared to positive $43,000 in the year-ago period, reflecting financial challenges.
High Cash Use from Operating Activities
Approximately $3.9 million of cash was used in operating activities during Q4 2024, compared to $0.2 million in the year-ago period, driven by higher inventory purchases.
Company Guidance
In the call, Reed's provided guidance centered on strategic initiatives aimed at driving future growth and profitability. The company emphasized the completion of a $10 million private placement, which is being utilized to rebuild inventory, enhance sales and marketing efforts, and expand personnel. Reed's highlighted the launch of a new multifunctional soda line, expected to secure over 8,000 distribution points and hit shelves between April and August 2025. Additionally, improvements in gross margin were noted, with delivery and handling costs reduced by 10% in Q4. The focus on transitioning from glass bottles to cans and enhancing co-packing partnerships has also led to logistical efficiencies and gross margin improvements in the low to mid-30% range. Despite a decline in net sales for 2024, attributed to inventory constraints, the company remains optimistic about a return to growth in 2025, supported by new product launches and expanded distribution channels.Reed's Corporate Events
Private Placements and FinancingBusiness Operations and Strategy
Reed’s Strengthens Market Position with New Credit Facility
Positive
Nov 19, 2024
Reed’s, Inc. has secured a $10 million revolving credit facility through a Senior Secured Loan Agreement with Whitebox Advisors and Cantor Fitzgerald Securities, offering financial flexibility with an 8% interest rate. The funds will address existing credit obligations and support business operations, while a significant stock exchange increases D&D’s ownership stake to 87.8%. This strategic financial maneuver aims to stabilize and enhance Reed’s market position.
Private Placements and FinancingFinancial Disclosures
Reed’s Reports Q3 Sales Drop, Secures Credit Facility
Neutral
Nov 14, 2024
Reed’s, Inc., a leading ginger beverage producer, reported a challenging third quarter in 2024 with net sales dropping to $6.8 million from $11.9 million the previous year, impacted by credit and inventory issues. Despite financial hurdles, Reed’s secured a $10 million credit facility and restructured secured notes through its majority stockholder, aiming to enhance liquidity and inventory levels. The company is optimistic about leveraging these strategic moves to overcome production challenges and drive future growth.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.