I Feel Bad for the Suckers Buying Jones Soda
Anyone buying Jones Soda better be hoping that today's run-up is news leaking about them finding a new sugar daddy (sorry for that pun...), because otherwise, this stock is boned.
A little background: since announcing a Wal-Mart distribution deal, Jones Soda is up 250%. A couple months ago, there was a proposed buyout of the company for ~$5 or $6 million, and now they're worth $50 million. Today alone they were up 80% on no real news. Hence, the thought that some kind of news might be leaking.
So, what's with this "huge" Wal-Mart distribution news? Well, Wal-Mart is going to start selling Jones 6 packs across its 3,800 stores. I mean, its good news for a struggling company, but the Wal-Mart deal is only expected to account for 10% of Jones retail distribution.
Okay, Jones did $23 million in revenue in the last 10 months. Let's be generous and say a 10% boost in distribution (to Wal-Mart, which drives a hard bargain), leads to a 10% increase in total sales. That puts Jones at an extra $2.3 million in sales. Oh, did I mention they've been losing money for YEARS, and burned through $2.5 million in cash last quarter?
I should also note, they're down to $2.3 million in cash, and last year during the final three quarters where they're "seasonally strong", their cash burn was still over $3 million. Good luck getting a credit facility with these figures! Hint: you can't. Or else they can always try to dillute shareholders, but how long their shares can act as currency.
I mean, this is an absolute joke, and aside from any kind of phantom buyout scenario I feel really bad for the people getting suckered in to this. As a Seattle native, I wish Jones the best, but they've cut to the bone to lose as little as they're losing now, are still bleeding cash, and have lost several other major contracts which will continue bleeding the top line.
On the plus side, note that I say top line, because for the most part it looks like these deals were unprofitable, and the company had no right signing them in the first place.
Anyway, I've said my .02. Stay away.