Posted by Rachel | Posted in Coffee and Accessories | Posted on 19-02-2010
Tags: blend, caribou, caribou coffee k cups, caribou coffee obsidian k-cups, coffee, k-cups, keurig
Javo Beverage Company Inc. (OTCBB: JAVO) Struggling Among Competitors
Just a week after National Coffee Day, a celebration of all things java around the world, coffee stocks are not faring so well. One Ipath EFT that tracks the futures on coffee as an asset is up nearly 3% today. Shares of other coffee companies are mixed, with Caribou Coffee Company up less than a percent, Peet’s Coffee and Tea Company is down about a percent, as is Starbucks.
But there are two big losers today as Green Mountain Coffee Roasters Inc., a $3 billion market cap coffee marketer who is now at the center of a Securities and Exchange Commission probe, and Javo Beverage Company, a $16 million market cap coffee marketer who even after a distribution agreement announcement 4 days ago, is off by about 17% today.
Shares of Green Mountain have been trading under intense pressure since the company admitted they had discovered an “immaterial” accounting error in fiscal 2007 that resulted in a $4.4 million, or $.03 per share, overstatement of net income on September 29th, 2010, ironically known as National Coffee Day.
That day, shares of Green Mountain plunged by 15% after the SEC’s Division of Enforcement probed the firm for documents relating to its revenue recognition practices, and its relationship with a “fulfillment” vendor, which analysts have identified as M. Block & Sons. Today, shares are trading down $1.42, or about 5% at $26.57 on what appears so far to be heavy volume.
In terms of action on the public markets, Javo has had a particularly tough year. In February, shares traded at around $.20 before trending down to today’s price of just $.05 per share, with little retracement – a pretty much flawless slide for a year to date change of around 75%. According to the company’s latest 10Q, the net loss per share has been improving since the beginning of 2009, but it doesn’t seem to be enough to keep Wall Street from selling.
How will Javo stay competitive in 2011 as other large-cap titans like Green Mountain and Starbucks continue as the profitable, established entities they are? Or will the big titans unravel themselves in 2011, considering the SEC probe and the fact that Starbucks had no participation in National Coffee Day this year, causing customers to slam the company on its Facebook wall.
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