Key points:
- NewAge stock has bounced before, but then faded
- Is this 40% premarket jump just more of the same?
- Or is there some specific news driving the NBEV stock price change?
NewAge (NASDAQ: NBEV) stock has jumped 40% premarket in what many will hope could be the start of a recovery. For the NBEV stock is down 90% this past year so some glimmer of hope would be welcome to long suffering shareholders. Of course, for us, as traders, what has happened in the past isn't important, what will happen is. So, we're interested in what happens next to NewAge, not however much other people have lost so far.
The thing is there's no actual news that accompanies this jump in the NBEV stock price. Nor is there, really, any grand indication of what news might be. The business itself is the wholesaling and direct retailing of health and wellness consumables. Which is both a hugely competitive industry and one that hasn't changed much recently. There's nothing out there that makes folk any more likely – or, to be fair, less – to purchase such products. There's no announcement from the company touting a new plan, or new products or sales channels.
Of course, given the past year 90% loss in the stock price there's a large enough short position, approaching 8% of the stock issuance. But that's not enough to engineer a short squeeze around. So while some might be touting it as a meme stock, a GameStop for this week – for who knows what happens out there on the message boards – it's not an operation that's likely to succeed greatly.
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Other than just random variation in the NBEV stock price – or information that is about to come but has leaked a bit – it's difficult to know why the price has jumped. There's not much analyst attention to the stock. There's no grand changes going on in the markets being addressed. The last we heard from the company itself was back a month when NewAge announced a strategic review. Along the obvious lines that this business plan isn't working so what else should we do? Before that there was just the news that NBEV was breaching NASDAQ minimum price rules but then we knew that from observing the NewAge stock price ourselves. There're still some 150 days before the NASDAQ quote might be lost if they don't do something.
What is also true is that we've seen this sort of movement in NewAge stock before. Back almost exactly two years there was a 109% jump overnight on news that NwewAge was to merge with ARIIX, Zennoa, LIMU, MaVie, and Shannen. That bounce, and much more (the stock price back then was around $3 a share, as opposed to today's around $0.30 cents per share) rather faded away as the promise of the combination seemed not to come through.
So, as traders we need to decide what to do about this NewAge stock price jump today. A reasonable plan being to try and work out why it has happened. Only once that is known is it really possible to know how to trade it. This is some random move that will fade? Or the creation of a new dawn for the NewAge stock price?
