Splash Beverage Group (SBEV) Stock

Contributor, Benzinga

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Splash Beverage Group (AMEX:SBEV)


0.11 [5.37%]
2.05 – 2.24
0.9901 – 5.6

Because the underlying beverage market features a low barrier of competition, the space is filled to the brim with direct rivals. Yet Splash Beverage is distinct in that the company only focuses on brands that resonate with consumers.

What’s more, the COVID-19 crisis may provide a critical catalyst for the organization. With consumers forced indoors for long stretches in 2020, this enabled Splash to steal market share from bigger, established competitors.

Splash Beverage Group Financial History

Though largely appealing to hardened speculators, a key driver for the enthusiasm toward the Splash Beverage Group IPO is that the company mostly represents a ground floor opportunity. Indeed, it’s about as close as you’re going to get in terms of a private equity play in the public capital markets. Naturally, this presents heavy risks to prospective buyers. At the same time, if you can stomach volatility, the upside potential is massive.

Going back to 2013, Splash Beverage only generated less than $500,000 in revenue. In the next 2 years, the company registered impressive percentage-basis gains. But it wasn’t until 2016 that Splash finally breached the $1 million threshold. Following a down year in 2017 when top-line sales again dipped below seven digits, it again bounced back in 2018, posting revenue of $1.31 million. Also in that year, Splash registered a net income of $70,000.

But it’s during the disruption of COVID-19 that the narrative becomes very attractive for traders. During the first quarter of 2020 when the coronavirus rudely interrupted society, Splash Beverage’s revenue dropped a staggering 59% year-over-year to $110,000. Still, management persevered, consecutively driving up revenue throughout 2020. By the end of it, the company posted top-line sales of $2.98 million, almost 3 times 2019 sales.

To be fair, Splash Beverage is presently eschewing earnings for growth. Last year, net loss amounted to nearly $29 million. In contrast, 2019 saw Splash’s earnings dip $480,000 below the breakeven point. However, momentum is strong for the organization, with Q1 2021 revenue coming in at $2.42 million. Barring an unusual development, Splash is almost guaranteed to exceed 2020 sales — and probably by a country mile.

Splash Beverage Group Potential

As mentioned earlier, the beverage market is incredibly competitive. To provide greater context, the U.S. Department of Agriculture reports that 36,486 food and beverage processing establishments operate in this country. Further, these plants employed 1.7 million workers in 2019. Despite the crowded market, Splash Beverage Group benefits from several factors that could potentially catapult its IPO above its rivals.

First, Splash Beverage focuses only on core brands that management believes levers high visibility and the potential for increased awareness or imparts strong category innovation. That may come in handy because several established beverage makers failed to resonate with the new generations of consumers. For instance, millennials and Generation Z simply don’t buy as many sugary soft drinks as older demographics, forcing industry giants into expensive rebranding efforts.

Second, the COVID-19 pandemic essentially provided Splash Beverage a hostage audience. In any other circumstance, beverage startups would incur significant advertising expenses to raise their product awareness. But because of government bodies shutting down nonessential activities, many consumers found themselves experimenting with various brands, according to a McKinsey & Company study. That inherently helps upstart organizations like Splash because it offers something different for the customer.

Third, the beverage specialist covers both nonalcoholic and alcoholic beverage categories. For the latter, Splash signed an agreement with Bernie Little Distributors, which will “distribute Splash’s SALT tequila” with a focus on the counties of Highland, Hardee, Polk and Okeechobee, totaling a population of nearly one million,” according to Benzinga staff writer Shivani Kumaresan. Further, Splash’s TapouT brand should appeal to a wide audience given the extreme popularity of mixed-martial arts (MMA).

How to Buy Splash Beverage Group (SBEV) Stock

In a traditional IPO process, underwriters sell a set number of shares to the professional investment community before they hit the open market. Because the available shares to sell are limited, underwriters exclusively focus on their choicest customers, usually mutual funds and other institutional investors. That leaves retail buyers out in the cold, forcing them to buy on the open.

But the Splash Beverage Group IPO is different in that it’s an uplisting from the OTC market to an official exchange. Therefore, the main challenge for Splash was meeting the Securities and Exchange Commission’s reporting requirements and the NYSE American’s listing requirements.

With that process finished, SBEV buyers should enjoy greater volume and transparency in their trading. Below is a basic rundown of how to buy stocks to get you started.

Step 1: Pick a brokerage.

Prior to Splash Beverage Group’s uplisting, your choice of brokerage would have been consequential because of the lack of standardized fees for trading in the OTC market. But now that the uplisting already occurred, any reputable platform will allow you to trade SBEV.

Below is a list of best brokers to consider.

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Step 2: Decide how many shares you want.

Simply put, your share count represents the risk-reward profile for your target investment. The more shares you own, the more profitability you accrue. On the flip side, a higher share count exposes you to more risk in case of market volatility.

Therefore, you want to take a moment to consider your exposure carefully.

Step 3: Choose your order type.

Before taking the plunge, take some time to understand these market concepts:

  • Bid: The bid is the highest price a buyer will render. It is always lower than the ask.
  • Ask: The ask is the lowest price that a seller will agree to. It is always higher than the bid.
  • Spread: Representing the difference between the bid and ask price, the spread also signals data about market liquidity and risk. Narrower spreads suggest higher liquidity and lower risk due to buyer availability, while wider spreads indicate lower liquidity and higher risk.
  • Limit order: Use a limit order to place a trade at a specific price. However, there’s no guarantee that the market will fulfill your limit order.
  • Market order: To buy shares at the prevailing price, place a market order. The terms are least favorable to you: buys on the ask, sells on the bid.
  • Stop-loss order: Use a stop-loss order to automatically exit your position at a predetermined price or the next available price, whichever comes first. During a gap-down session, a stop-loss may fill (well) below your predetermined price.
  • Stop-limit order: A stop-limit order only fulfills at a predetermined price, which offers transparency. But continued red ink may prevent your stop-limit order from fulfillment.

Step 4: Execute your trade. 

To execute a market order, follow these steps:

  1. Select action type (buy or sell).
  2. Enter the shares you want to acquire (or sell).
  3. Hit the Buy (or Sell) button.

Limit orders follow the same steps though you must include your desired execution price.

A Public Ground Floor Wager

Though wildly competitive, the beverage market over the years opened an opportunity for upstart entities like Splash Beverage Group. With young consumer tastes changing dramatically compared to prior generations, millions of buyers are looking for new brands and experiences. That serves exceptionally well for SBEV stock.

Nevertheless, investors should note that Splash Beverage is a high-risk, high-reward opportunity. If you can handle the volatility, SBEV may have something for you.