Union Square (NYSE:SQ) Park Capital Management, LLC, along with its affiliates, has reported selling shares of REED's, Inc. (NASDAQ:REED), according to recent SEC filings. The transactions, dated November 14 and 15, involved the sale of a total of 10,525 shares of Reed's (OTC:REED) common stock, with prices ranging from $1.11 to $1.13 per share. The total value of these transactions amounted to $11,802. Following these sales, the reporting entities, which include Union Square Park Partners, LP, and Union Square Park GP, LLC, collectively hold 1,220,174 shares, including shares issuable upon the exercise of warrants. These shares are held indirectly, as noted in the filing's footnotes.
In other recent news, Reed's Inc. reported a decline in Q3 2024 net sales to $6.8 million, a significant drop from the $11.9 million recorded in the same period last year due to production constraints. Despite the challenges, the company has expressed optimism for 2025, citing a new line of health-conscious beverages and a $10 million revolving credit facility with Whitebox as potential growth drivers. The gross profit margin dropped to 18% in Q3, down from 34% the previous year, and operating losses widened to $3.1 million from $0.1 million year-over-year. In light of these recent developments, Reed's withdrew its full-year 2024 outlook but remains optimistic about future growth. The company expects to return to growth and profitability with recent capital infusions and an improved balance sheet, planning to fully stock inventory by the end of 2024 to meet demand in 2025. Despite inventory challenges and restricted liquidity, Reed's expanded distribution, adding over 5,000 new points of distribution, and is transitioning to can packaging to enhance logistical efficiency. The company's balance sheet as of September 30, 2024, showed $0.3 million in cash and a total debt of $27.1 million.
InvestingPro Insights
Recent data from InvestingPro sheds light on Reed's, Inc.'s (NASDAQ:REED) financial position and market performance, providing context to the recent share sales by Union Square Park Capital Management. The company's market capitalization stands at a modest $7.79 million, reflecting its small-cap status. This valuation comes amid challenging financial metrics, with Reed's reporting a revenue decline of 16.95% over the last twelve months as of Q3 2024, and a more pronounced quarterly revenue drop of 43.05% in Q3 2024.
The company's profitability is under pressure, with an adjusted operating income of -$5.54 million and an EBITDA of -$5.42 million for the last twelve months. These figures align with the negative earnings per share of -$3.55 reported for the same period. Despite these headwinds, Reed's maintains a gross profit margin of 32.07%, suggesting some resilience in its core business model.
InvestingPro Tips highlight potential opportunities and risks for investors. One tip notes that Reed's stock is trading at a discount to its fair value based on analyst price targets, with a fair value estimate of $3.00 compared to the previous closing price of $1.08. Another tip points out that the company's revenue growth has been lower than the industry average, which could explain the recent insider selling activity.
For investors seeking a more comprehensive analysis, InvestingPro offers additional tips and insights beyond what's mentioned here. In fact, there are 12 more InvestingPro Tips available for Reed's, Inc., providing a deeper understanding of the company's financial health and market position.
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