Indoor Farming Stocks Tumble This Week, AppHarvest Reports Q4 & FY2022

AppHarvest leads the way in Q4 net sales, but disappoints investors with net loss while Local Bounti faces delisting notice and crucial decision for its financial results

Exploring the Latest Developments in Indoor Farming with AmplifiedAg & Artechno Growsystems

Good morning readers, This week's indoor farming stock performance has been a mixed bag, with some companies experiencing losses while one made significant gains. AppHarvest saw a decline of 25.71%, while Local Bounti lost 17.21%, Kalera PLC lost 7.50%, Urban-gro lost 4.19%, HydroFarm lost 4.91%, CEA Industries lost 3.17%, and Agrify Corp lost 9.61%. On the other hand, Edible Garden Ag made gains of 11.59%.

Meanwhile, the latest macroeconomic data shows that the monthly real gross domestic product (GDP) for January 2023 is estimated to have increased by 0.3%, while the services sector saw a growth of 0.5%. The construction sector, on the other hand, performed poorly. In this context, AppHarvest reported Q4 net sales of $4.5 million, with a full-year net sale of $14.6 million, while Local Bounti received a delisting notice from the New York Stock Exchange.

Other companies also had positive developments, such as HydroFarm meeting earnings expectations and exceeding sales in 2022 and CubicFarms acquiring Grow Glide's assets to further its growth.

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This Week In Indoor Farming

Indoor Farming Stock Performance This Week

  • AppHarvest lost 25.71% (-27 cents)

  • Local Bounti lost 17.21% (-11 cents)

  • Kalera PLC lost 7.50% (-33 cents)

  • Urban-gro lost 4.19% (-15 cents)

  • HydroFarm lost 4.91% (-8 cents)

  • CEA Industries lost 3.17% (-3 cents)

  • Edible Garden Ag gains 11.59% (+32 cents)

  • Agrify Corp lost 9.61% (-4 cents)

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Macroeconomic News

According to the latest economic data, the monthly real gross domestic product (GDP) for January 2023 is estimated to have increased by 0.3%, a positive sign after a decline of 0.5% in December 2022. However, the overall picture for the three months to January 2023 suggests that the GDP remained unchanged. The services sector, which saw a decline of 0.8% in December 2022, rebounded with a growth of 0.5% in January 2023, thanks to significant contributions from education, transport and storage, human health activities, and arts, entertainment, and recreation activities. The output in consumer-facing services also improved, growing by 0.3% in January 2023, following a fall of 1.2% in December 2022. On the other hand, the production output declined by 0.3% in January 2023, preceded by a growth of 0.3% in December 2022. The construction sector was the worst performer, falling by 1.7% in January 2023 after stagnating in December 2022. Despite the mixed results, there were no revisions to previously published data in this release.

In his testimony on the Semiannual Monetary Policy Report to Congress, Chair Powell acknowledged the significant hardship that high inflation has caused and reassured that the Federal Reserve is committed to returning inflation to its 2 percent goal. The Federal Reserve has taken forceful actions to tighten the stance of monetary policy, raising interest rates by 4-1/2 percentage points over the past year. Although inflation has been moderating in recent months, there is little sign of disinflation in the category of core services, which accounts for more than half of core consumer expenditures. Additionally, the housing sector has weakened, mainly due to higher mortgage rates. Despite the slowdown in growth, the labor market remains extremely tight. The Committee has slowed the pace of interest rate increases over its past two meetings, but getting inflation back down to 2 percent is likely to be bumpy. If the data indicated that faster tightening is warranted, the Federal Reserve would be prepared to increase the rate hikes. The overarching focus is to bring inflation back to the 2 percent goal and keep longer-term inflation expectations well anchored. The Federal Reserve is committed to using its tools to achieve its maximum employment and price stability goals.

This Week in Indoor Farming

AppHarvest reported Q4 net sales of $4.5 million and full-year net sales of $14.6 million, representing year-over-year increases of 45% and 60%, respectively. The company also achieved its revised guidance and quadrupled its farm network in 2022 while diversifying its crop portfolio. However, AppHarvest recorded a net loss of $93.3 million for Q4 and a non-GAAP Adjusted EBITDA loss of $72.0 million for the entire year, missing market consensus estimates and causing concern among investors.

The disappointing earnings led to a significant decline in the company's stock price and caused institutional investors to divest their shares, with Norges Bank Investment Management being the largest seller. Despite this, BNP Paribas and Jane Street Capital acquired shares, and Barclays maintained an Equal-Weight rating for the company but lowered its price target. AppHarvest plans to optimize production, revenue, and costs across its four-farm network under Project New Leaf to improve profitability.

Local Bounti Corporation has received a delisting notice from the New York Stock Exchange (NYSE) due to its common stock's average closing price being below $1.00 over a consecutive 30-trading-day period. However, the company plans to notify NYSE of its intention to cure the stock price deficiency and return to compliance with the NYSE’s continued listing standards. Despite this setback, Local Bounti remains committed to its position in the indoor agriculture industry and implementing various strategies to overcome market challenges.

The company faces a crucial decision regarding its financial results and potential reverse stock split. Analysts predict the stock will outperform in the coming months, with a forecasted share price between $2.75 and $13.00 in the next 12 months. However, several CEA companies that have performed reverse stock splits have seen their downfall as their financial results failed to meet investors' expectations. Thus, Local Bounti could either wait and see how the market reacts to its upcoming financial results or perform a reverse stock split. The decision will significantly impact the company’s future performance.

Other News

HydroFarm HYFM 0.00 Meets Earnings Expectations & Exceeds Sales in 2022

Agrify AGFY 0.00 Corp Gets Its Credit Facility Amended

Edible Garden’s EDBL 0.00 Latest Sauce Soon Available In Whole Foods

CubicFarms CUB 0.00 Announced Hydrogreen Installation in Utah

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