HI there,
Dan answered a question on this stock last week and I'll post his answer. However, NEXE is not a Bull List stock.
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This is a stock I've actually been watching recently.
I'm a huge advocate of it, as I believe single-use coffee pods are an absolute disaster for the environment. I used to use a Keurig, but I have since gotten rid of it and went back to a more traditional way of coffee brewing, primarily because of the devastating environmental impact these pods are going to have down the line.
It's going to be very interesting with them rolling out production this year to see how well this company does. They state that they want to ramp up production to supply over 220 million pods a year.
The target market (as per the company, always take these with a grain of salt) is $30 billion by 2025. So, with a market cap of only $120 million you can see the potential here, especially if they truly can come up with a biodegradable Kcup. More environmentally friendly ones have been developed, but they've generally been a disaster.
Keep in mind, this is a company that is at VERY early stages of development. Highly speculative, and one that I haven't purchased yet.
There's a lot that can go right here, but there is also a lot that can go wrong. For one, taste is huge. Although I truly feel that humans want to make environmentally friendly decisions, they're not going to sacrifice the taste of their coffee to do so. So if these pods roll out and it's making the coffee taste bad, it could be devastating for the company. Secondly, large scale production costs are relatively unknown and to be honest, just production in general.
You could make a very aggressive play and purchase the company now, or you could do as I'm doing and place it on a watch list, to see how it develops as it moves forward in 2021.
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It is worth noting that the company has been paying influencers to promote the stock. In fact we were also approached to to a paid analysis on the company, but we declined (as we always do). The fact that such a small stock can be manipulated to an extent that its share price doubles in only a few days - we don't like. As Dan mentioned - we do like what it's doing but it has on business model yet and hasn't generated revenue. It claims to be in commercialization stage (as of Q4) and will ramp up capacity to 170M units by end of 2021. All well and good, but once again - we don't know any financial details. So investors are now paying $255M for a company with no sales, no idea sales will look like and no insight into margins, costs, etc.
This is an example where euphoria takes hold and sends a stock price flying thanks to a few influencers that have been paid to actively promote the stock. Not saying it's a bad company - it can certainly be successful. Personally however, I tend to avoid any stock that can be so easy manipulated regardless how attractive it looks. I'd like to see the company prove itself first before jumping into it as an investment.
Mat