Reed's (REED) AI Stock Analysis

• Market Cap: $49.65M
• Dividend Yield: N/A
• Average Volume (3M): 5.59K
• Price to Earnings (P/E): ―
• Beta (1Y): -0.46
• Revenue Growth: -19.95%
• EPS Growth: 64.37%
• Country: US
• Employees: 24
• Sector: Consumer Defensive
• Sector Strength: 41
• Industry: Beverages - Non-Alcoholic
• EPS (TTM): -0.13
• Shares Outstanding: 48,673,720
• 10 Day Avg. Volume: 5,053
• 30 Day Avg. Volume: 5,589
• PEG Ratio: N/A
• Price to Book (P/B): N/A
• Price to Sales (P/S): N/A
• P/FCF Ratio: N/A
• Enterprise Value/Market Cap: 1.10
• Enterprise Value/Revenue: 1.51
• Enterprise Value/Gross Profit: 6.52
• Enterprise Value/Ebitda: -4.44
• 1Y Price Target: $1.00
• Price Target Upside: -1.96% Downside
• Rating Consensus: Hold
• Number of Analyst Covering: 1

• Rating: 42 Neutral
• Price Target: $1.00 ▼(-1.96% Downside)

Reed's overall stock score is primarily impacted by its poor financial performance, characterized by declining revenues, negative margins, and high leverage. Technical analysis and valuation provide little support, with mixed signals and a negative P/E ratio. The earnings call highlights strategic efforts but also underscores ongoing financial challenges.

Positive Factors

Product Line Expansion

The expansion of Reed's functional soda line into major retailers like Sprouts and Kroger indicates strong market acceptance and potential for revenue growth, supporting long-term business expansion.

Strategic Personnel Appointment

The appointment of an experienced VP for On-Premise Sales is expected to enhance Reed's market expansion efforts, particularly in food service and convenience channels, driving future growth.

Costco Partnership

Securing a partnership with Costco for a seasonal product line can significantly boost Reed's sales volume and brand visibility, contributing to long-term revenue growth.

Negative Factors

Declining Revenue

The decline in net sales reflects challenges in maintaining customer volumes, which could impact Reed's ability to sustain revenue growth and market share over time.

High Leverage

High leverage poses financial risk, limiting Reed's flexibility to invest in growth opportunities and potentially affecting its long-term financial stability.

Negative Cash Flow

Negative cash flows indicate operational inefficiencies and financial strain, which could hinder Reed's ability to fund strategic initiatives and manage debt obligations in the long term.

Reed's Business Overview & Revenue Model

Company Description

Reed's, Inc. engages in the manufacture and distribution of natural hand-crafted beverages in the craft specialty foods industry in the United States, Canada, Asia, Europe, Australia, and South America. It offers Reed's craft ginger beers; Reed's real ginger ales; Reed's ready to drink products; Virgil's handcrafted sodas; ginger candy; and other ginger beverages under the Reed's brand. Reed's, Inc. sells its products to natural food and gourmet retailers, grocery store chains, mass merchants, club stores, convenience and drug stores, liquor stores, industrial cafeterias, and on-premise bars and restaurants through distributors and independent distributor partners, as well as direct to store distribution. It also exports its products to France, the United Kingdom, South Africa, the Caribbean, Canada, Spain, the Philippines, Israel, Australia, Asia, rest of Europe, and South America. The company was formerly known as Original Beverage Corporation and changed its name to Reed's, Inc. in 2001. Reed's, Inc. was founded in 1987 and is headquartered in Norwalk, Connecticut.

How the Company Makes Money

Reed's generates revenue primarily through the sale of its beverage products, which are distributed across various retail outlets, including supermarkets, health food stores, and online platforms. The company leverages both direct-to-consumer sales and partnerships with distributors to reach a wider market. Key revenue streams include sales from their flagship ginger ales and other flavored sodas, as well as kombucha products that appeal to the growing trend of fermented beverages. Reed's also benefits from strategic partnerships with retailers and online marketplaces, enhancing its visibility and availability to consumers. Additionally, the company may engage in promotional campaigns and collaborations that drive brand awareness and consumer interest, further contributing to its earnings.

Reed's Financial Statement Overview

Summary

Reed's financial performance is severely challenged, with declining revenues, negative profit margins, high leverage, and negative cash flows. The company faces substantial hurdles in improving its financial position and must focus on enhancing operational efficiency, reducing debt, and stabilizing cash flows.

Income Statement

Reed's income statement shows significant challenges with declining revenue and negative profit margins. The TTM data indicates a revenue decrease of 6.12% and a net profit margin of -35.19%, reflecting ongoing struggles to achieve profitability. The gross profit margin is relatively low at 29.61%, and both EBIT and EBITDA margins are negative, indicating operational inefficiencies. Overall, the company faces substantial hurdles in improving its financial performance.

Balance Sheet

The balance sheet reveals a high debt-to-equity ratio of 2.25, indicating significant leverage and potential financial risk. The return on equity is positive at 156.68%, but this is due to the low equity base rather than strong performance. The equity ratio is weak, suggesting limited financial stability. Reed's needs to address its high leverage to improve its financial health.

Cash Flow

Reed's cash flow statement highlights negative operating and free cash flows, with a slight improvement in free cash flow growth at 44.52%. However, the operating cash flow to net income ratio is negative, indicating cash flow challenges. The free cash flow to net income ratio is slightly above 1, suggesting some ability to cover net losses with free cash flow, but overall cash flow remains a concern.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	36.04M	37.95M	44.71M	53.04M	49.60M	41.62M
Gross Profit	8.34M	11.38M	9.71M	12.11M	13.60M	12.77M
EBITDA	-12.24M	-7.38M	-9.28M	-14.73M	-14.96M	-8.67M
Net Income	-16.35M	-13.15M	-15.52M	-19.11M	-17.60M	-11.48M
Balance Sheet
Total Assets	23.70M	25.14M	18.88M	25.49M	26.32M	20.06M
Cash, Cash Equivalents and Short-Term Investments	2.68M	10.39M	603.00K	533.00K	49.00K	595.00K
Total Debt	10.60M	10.41M	27.58M	21.89M	10.78M	1.46M
Total Liabilities	21.97M	18.49M	38.06M	33.96M	22.12M	9.65M
Stockholders Equity	1.74M	6.65M	-19.18M	-8.47M	4.20M	10.40M
Cash Flow
Free Cash Flow	-13.46M	-6.28M	-4.35M	-15.44M	-17.92M	-9.66M
Operating Cash Flow	-13.23M	-6.12M	-4.27M	-15.43M	-17.59M	-9.50M
Investing Cash Flow	-234.00K	-167.00K	-20.00K	-2.00K	-335.00K	-161.00K
Financing Cash Flow	15.81M	16.08M	4.36M	15.92M	17.38M	9.34M

Reed's Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 1.02
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Positive
• RSI: Neutral
• STOCH: Positive

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For REED, the sentiment is Negative. The current price of 1.02 is below the 20-day moving average (MA) of 1.05, below the 50-day MA of 1.04, and below the 200-day MA of 1.13, indicating a bearish trend. The MACD of >-0.01 indicates Positive momentum. The RSI at 45.93 is Neutral, neither overbought nor oversold. The STOCH value of 3.03 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for REED.

Reed's Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
AKO.A	79 Outperform	$3.55B	12.01	24.18%	7.36%	17.01%	11.63%
COCO	77 Outperform	$2.22B	36.11	24.35%	―	11.97%	16.10%
FIZZ	63 Neutral	$3.78B	20.23	45.84%	―	0.46%	0.91%
Sector *	62 Neutral	$20.56B	14.66	-3.18%	3.15%	1.93%	-6.58%
ZVIA	54 Neutral	$185.13M	―	-22.11%	―	-1.08%	54.50%
OTLY	52 Neutral	$527.56M	―	-114.20%	―	4.47%	42.22%
REED	42 Neutral	$49.65M	―	71.20%	―	-19.95%	64.37%

Reed's Corporate Events

Reed’s Reports Q2 2025 Financial Decline

Reed’s, Inc. reported a decline in financial performance for the second quarter of 2025 compared to the same period in 2024, with net sales dropping from $11.9 million to $9.5 million and a net loss increasing to $6.0 million. Despite these challenges, the company is focusing on strengthening its commercial execution and positioning for long-term growth by investing in sales talent, marketing, and channel development. Reed’s is also optimizing its product portfolio, which led to $1.6 million in inventory write-offs, to improve inventory management and focus on high-demand products. The company aims to expand distribution and enhance retail availability to drive future growth and profitability.

Reed’s Appoints CFO as Principal Accounting Officer

Reed’s, Inc. announced the reassignment of its Chief Accounting Officer, Joann Tinnelly, with her duties being redistributed among other personnel, while Doug McCurdy, the Chief Financial Officer, will take on the role of principal accounting officer starting July 7, 2025. Additionally, on July 1, 2025, Reed’s, Inc. settled a previous engagement with an investment bank by agreeing to pay a total of $1.6 million, ensuring a mutual release and waiver from any liabilities or obligations under the prior agreement.