The second quarter is turning out to be an inflection point for True Drinks Holdings, Inc. (OTCMKTS: TRUU), after years of underperformance. The stock has rallied by more than 400%, in recent weeks, bringing to an end a sell-off that had plunged it to all-time lows.
TRUU Price Analysis
A spike in share price, as well as market activity, comes on huge turnover of traded shares an indication of renewed investor interest. The trigger behind the recent surge is the confirmation that the company has entered into an agreement as it eyes a business merger with Charlie’s Chalk Dust.
True Drinks is to acquire all outstanding membership interest in Charlie’s, therefore, gain access to a premium line of vapor products currently in distribution in over 90 countries. Investors have reacted to the development by pushing the stock up the charts after a long period of consolidation.
True Drinks is exploding in the market, in response to recent developments if a 400% plus spike in share price is anything to go by. The stock has since pulled lower after initially rallying to the $0.07 level. Immediate support on further pullbacks is seen at the $0.04 support level.
Above the $0.04 mark, True Drinks remains well supported for further upside action as a breakout play. Conversely, a breach of the $0.04 support level could result in the acceleration of the sell-off with the stock likely to plummet to the $0.02 handle.
About True Drinks
True Drinks is a beverage company engaged in the development and distribution of all-natural vitamin-enhanced drinks. Its lead product is the Aqua Ball Naturally Flavored water distributed through select retail channels. The company is in the process of expanding its footprint into the vapor business having made a strategic acquisition.
Charlie’s Chalk Dust Acquisition
Shares of True Drinks are exploding on the confirmation that the company is planning to diversify its business empire with an expansion into the sale of vapor products. With the acquisition of Charlie’s Chalk Dust LLC, the company will gain access to high-quality vapor products.
True Drinks is in the final stages of completing the acquisition having raised gross proceeds of approximately $27.5 million from accredited and institutional investors. Upon the payment of Charlie’s Founders costs and other expenses the company has been left with $5.6 million in net cash, proceeds set to strengthen the balance sheet
“We’re looking forward to working together on diversifying our product offerings while penetrating new markets. This opportunity grants us access to capital for scaling the business and helps bring the story of Charlie’s Chalk Dust to the public markets. Simply put, we are thrilled for what the future has in store – for our customers, our employees, and shareholders,” stated COO Ryan Stump.
Charlie’s Revenue generation Credentials
Charlie’s Chalk Dust joins True Drinks on the heels of generating $20.8 million in net revenues, in 2018, up from $12.2 million as of 2017. The company is projecting robust growth in 2019. Revenues as of March has already skyrocketed to $6.8 million representing a 51% year-over-year increase.
With the merger, Charlie’s will be able to leverage True Drinks distribution and product formulation expertise while capitalizing on its brand recognition to accelerate sales growth. True Drinks intends to expand Charles’s core business into new markets as a way of strengthening revenue generation.
Plans are also underway to diversify Charlie’s product offering as a way of catering to varying demand in the market.
“We’re looking forward to working together on diversifying our product offerings while penetrating new markets. This opportunity grants us access to capital for scaling the business and helps bring the story of Charlie’s Chalk Dust to the public markets,” added Mr. Stump.
What Next For True Drinks
True Drinks has taken flight and remains well positioned to continue edging higher. Market sentiments have received a significant boost with the acquisition of Charlie’s Chalk Dust, given its solid revenue base.
Investor confidence in True Drinks should continue to edge higher as the two companies work together to come up with new products and expand into new markets in a bid to accelerate sales growth.
For investors eyeing opportunities in the stock, dips should be viewed as buying opportunities.
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Disclosure: We have no position in TRUU and have not been compensated for this article.