One of the biggest losers of 2021 so far has been Neptune Wellness Solutions Inc. (TSX: NEPT) (Nasdaq: NEPT) and we continue to monitor the trend.
During the last month, Neptune has fallen more than 20% and the stock has failed to find a bottom. The stock has fallen more than 80% from its 2021 highs and several broker-dealers have lowered their respective price target on it.
Earlier this month, Neptune reported first quarter financial results and revenues came in lower on a year-over-year basis. We attribute the declining revenues to a change of the business model and will monitor how the management team can get the business back on track.
Two key metrics from the first quarter earnings report were Adjusted EBITDA and net loss. When compared to the same quarter last year, Neptune’s Adjusted EBITDA loss increased by more than $12.5 million ($15.9 million vs. $2.5 million), while the net loss increased by more than $10 million ($23 million vs. $11.4 million).
Neptune has faced challenges as it has transitioned into a diversified, health and wellness consumer packaged goods (CPG) company. From hand sanitizer to organic baby foods, Neptune now sells a more diversified portfolio of products. Prior to the transition, the company was highly levered to Canada’s recreational cannabis market and we will monitor how this aspect of the business evolves on a going forward basis.
At current levels, Neptune is valued at less than $100 million and will most likely need to conduct a large reverse split in order to stay listed on the Nasdaq Exchange. The shares are trading below the $0.60 level and this falls below the exchange’s minimum share price requirement.
Going forward, we will continue to monitor Neptune from the sidelines and remain cautious with the risk-reward profile. If you are interested in learning more about Neptune Wellness Solutions, please send an email to email@example.com with the subject “Neptune Wellness Solutions” to be added to our distribution list.
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