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REEDS, Inc. Message Board

  • analyst112 analyst112 Apr 16, 2012 11:34 AM Flag

    Flawed business plan

    I looked at REED and see 30% gross margins in a business that all others have 50% gross margins. Their cost of production is just too high. To overcome this they need massive sales but this is a niche market. A survey of shelf prices shows them near the most expensive so price increases are out of the question. The sugar content is also at 140 calories per bottle, 20 more than others. Virgels low cal offering tastes awful as Stevia leaves an after taste.

    My take is they will have difficulty getting any meaningful profits anytime soon.

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    • $2.19.

      I imagine you're choking on it.

    • What is your deal, dude? Every time you post here it's a slam on the company. If you have some REED stock, why don't you just sell it and go on your merry way? Or are you shorting the stock? It must be burning you up that it's up 80% in the last 4 months.

      To answer your specific points, yes the gross margin is 30%. That's nothing new to anyone following this company. Yes they need strong sales (how do you define "massive"?), show me another company growing as fast as this one in the last 2+ years. Yes, it's a niche market. So is the one Sam Adams plays in. REED is a $20 million market cap company with $25 million in annual sales growing at a 25% annual rate. Positive cash flow with improving financials. It's a bargain stock with a bright future. Yes, Stevia tastes like crap. So does every other artificial sweetener including aspartame. I ask you though, how has that impacted sales of Diet Coke and Pepsi?

      I'll ask you again, what's your deal? You say "I looked at REED" as if you haven't been actively slamming the company on this board since at least December (check your posting history).

      • 1 Reply to trampdad22
      • Or he just missed the buying opportunity and is hoping to spread lies to enter into the stock at a lower price.

        Also keep in mind that REED paid out $327,000 in litigations expenses for a worker's comp lawsuit in 2011:

        "A legal matter asserted by a former industrial employee resulted in legal costs of $327,000 during 2011."

        If that didn't occur, the company would only have lost about $614,000 in net income, well below the net losses of $1.3 million in 2010 and $2.5 million in 2009.

        Things are looking up for REED!

    • JSDA: "For the year ended December 31, 2011, gross profit as a percentage of revenue increased to 24.6% from 23.1% for the year ended December 31, 2010, despite the overall decrease in revenue for 2011 compared to 2010.

      REED: "Overall, gross profit of 30% remained the same vs. 2010, despite cost increase pressures in 2011.

      Hmmmmmmm! Apparently not everyone makes 50% gross profit.

    • Fizz Gms are at 36%..........As REED scales/ramps those ingredient costs can be spread over a much larger base. In the eyes of a would be suitor- the Co's top-line growth rate having been achieved in a recessionary eco environment is to be admired. I agree, a much larger entity could absorb those input costs more readily and generate faster eps growth. In time, this well be an earnings machine. Remember, Reed does about zero promotion and product sale is based on word of mouth.

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