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Why New Age Beverages Stock Skyrocketed Thursday

Daniel Sparks, The Motley Fool

What happened

New Age Beverages Corporation (NASDAQ: NBEV), which sells ready-to-drink tea, coffee, kombucha, energy drinks, medical beverages, and other products, saw its stock soar as much as 62.5% on Thursday. As of 11:03 a.m. EDT, the stock was up about 59%.

The stock's gain followed an announcement Wednesday that the company plans to launch a portfolio of beverages infused with cannabidiol (CBD) at the National Association of Convenience Stores show Oct. 7 to 10 in Las Vegas. 

A chart of a stock price moving higher

Image source: Getty Images.

So what

New Age is optimistic about CBD-infused beverages, noting that Brightfield Group, a market researcher for the cannabis industry, estimates the CBD market will top $22 billion in just four years.

In a press release on Wednesday, the company said, "Non-psychotropic CBD is one of the most medicinal compounds in the cannabis plant, reportedly helping with everything from arthritis to epilepsy and cancer, and is seen by many as a natural remedy instead of a pharmaceutical or narcotic drug."  

The company also cited the 2018 Farm Bill, which was recently passed by the House and Senate, as an important catalyst. It "would likely legalize CBD for farmers across the country and allow it for sale nationally in all channels," New Age said.

Now what

The company says it will be meeting with some major retailers during the Las Vegas event, "taking orders on a first-come, first-serve basis, given anticipated demand."

While New Age's CBD-infused products could prove to be a catalyst for the company, investors should be cautious about pricing in too much speculation.

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Daniel Sparks has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.