APPH - Why AppHarvest Sank 25% in August
Shares of AppHarvest (NASDAQ: APPH) fell 25% in August, according to data from S&P Global Market Intelligence . The high-tech indoor farming start-up posted disappointing earnings and filed for an at-the-money stock offering in August, which could have driven down the share price. Shares also likely got hit with the broad sell-off in growth stocks that resumed last month.
On Aug. 3, AppHarvest released its earnings for the quarter ending in June. Revenue was a measly $4.4. million for the period, up 39% year over year. Along with this revenue came a net loss of $28.7 million, or a net margin of approximately negative 600%. Building out farming infrastructure, especially with all the technology AppHarvest plans to implement, is expensive and will require much more scale than a few million in quarterly revenue to turn profitable. The company is working on this expansion right now with three new farms that will make berries and salad greens set to finish by the end of this year.
In the current market conditions, investors are not happy with companies that are losing tons of cash, which is likely why AppHarvest stock has sold off so much. The company also filed a $100 million at-the-money stock offering, which means the company can sell new shares of its stock to the public market whenever it wants to. This additional selling pressure, along with the prospects that the company may heavily dilute its existing shareholders, could have driven down the share price even further last month.
For further details see:
Why AppHarvest Sank 25% in August