What happened to ELEV8 BRANDS INC (OTCMKTS:VATE)?
Its price has recently declined a lot. From touching 52-week record highs, it lost almost one-third of its market cap. Shareholders and management should be having a tough time.
Let’s catch up a little with the previous announcements.
We still remember when the market exploded up in December. The company provided the great new developments to the market. Firstly, Amazon Prime had been elected to distribute its CBD products. Furthermore, Lucky’s Market in Orlando, Florida, had placed a new order for Elev8 Hemp Tea. So, the market expected brilliant revenues in the following quarter.
But, that was not all. The company has been in the process of increasing its capacity. VATE has been opening new stores to cope with the growing demand for the products and services.
The market seemed very optimistic about the future of the company. Consequently, new market players seemed to arrive at the exchange. They pushed up the share price astonishingly. Those who bought in November could triple their money in only one month. It was incredible.
Check the stock price action:
The company should explain what’s going on. Fair enough, but we have to ask considering the following questions too. Did market participants try to get the money and run? It seems clear that it was the case here. The market participants overheated the stock and made it exploded up. When there were no more buyers, it collapsed. It happens all the time. It is the game of non-patient individuals in the market.
VATE’s new developments should pay off in the long term. The company’s expansion should bring revenues. But, management and shareholder need to be patient; Rome wasn’t built in a day.
In this new update, we will provide the new information. Before we go on, we need to say something. The new announcements did not create the share price decline. The announcements showed the good direction of VATE. We believe that short-term players created the decline. They stopped buying. That’s all.
Before we proceed further, let’s provide some background. VATE has its head office in Rockledge, Florida. Its main objective is the development and marketing of products for the fitness and wellness markets.
Elev8 Hemp LLC is the most interesting inside VATE. This subsidiary is set to capitalize the growing demand for hemp products in North America. Its products include hemp coffee, hemp water, and hemp-based skin care products.
The December’s share price run was partially fuelled by the new orders from Lucky’s Market inCoral Springs, Florida. On December 28, 2017, the market noticed a new one. The management was quite optimistic about the tea sales. Have a look:
Also, check the words of the CEO:
“The sales of our tea have exceeded our expectations and we anticipate bringing our tea into even more locations by the end of the month.” said Chief Executive Officer Ryan Medicocommented
There is more.
On January 9, 2018, more good news arrived. VATE confirmed that more stores are selling its products. Hemp Authority at Chapman Ave. Garden Grove, California, is now offering Elev8 Hemp Coffee, and Elev8 Hemp Tea.
Additionally, the company released more expansion plans. Read the following:
“Our team is very excited to have our first retail presence in California. We plan to expand in this market and gain exposure for our brand.” CEO of Elev8 Brands, Ryan Medico
Our concern is that this news cannot justify value destruction, but value creation.
On January 26, 2018, the expansion continued. Company subsidiary 02 Breathe LLC entered into a lease agreement and will be opening a new store in the milk district near downtown Orlando, Florida.
“With all the growth we are experiencing, this will be one of two new locations we are planning to open in 2018. As we start the year out strong, we hope to lock down the second location by the end of the first quarter.” said Elev8 Brands CEO Ryan Medico
Also, the market noticed the availability of Elev8 Hemp coffee and tea in the Naples, Florida Lucky’s Market.
What’s our take? More stores usually mean more revenues. More stores offering the products also mean more revenues. Consequently, the market should have reacted positively again. But, again nothing happened.
February was also a good month regarding new announcements. New products namely Elev8 Hemp Coffees and 300mg Zoe CBD Tinctures were ready. Apparently, the demand for Elev8’s Hemp Coffee products has been high. Thus, the management decided to increase the number of blends offered.
Also, fourth-quarter sales from Elev8 Hemp and Zoe CBD are up by over 30%. The CEO, Ryan Medico, said that 2018 is going to be a fantastic year. The funny part is that the share price is still trading at the lows of $0.05 mark. Isn’t it ironic? When is the positive sentiment coming back? Is this a buy-the-dip opportunity?
Currently trading with a market cap of $14 million, VATE is an interesting story among small cap. The revenues increased by 25% in the last Q3 report as compared to the revenues of Q4. With an asset/liability ratio under 1x, VATE will need to explain its recapitalization plans. But, if the expansion continues, the market could push the share price higher.
To sum up, the announcements are driving the share price. Monitor them for more stock gains!
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Disclosure: We have no position in VATE and have not been compensated for this article.
Image courtesy of Owen Iverson via Flickr