Reborn Coffee (NASDAQ:REBN) shares have been surging significantly in the past few days. The rise has been dramatic and market optimism is still solid. Here’s what you need to know:
Reborn Coffee received approval as a U.S. franchisor. This has unlocked a nationwide growth strategy and the company now aims to open over 100 franchise locations within three years. It will target California and non-registration states first and should scale the company significantly.
Reborn partnered with Finlays to launch ready-to-drink cold brew products. Production begins in Q1 2025 across the U.S., Malaysia, and Korea. There is a partnership with Bbang Ssaem Bakery to distribute preservative-free baked goods across 8,000 stores in South Korea. Bbang Ssaem is a bakery chain that Reborn acquired a 58% stake in. It is also expanding into Thailand.
Q3 sales declined 17% year-over-year, but wholesale and online sales grew 432% to $140,407. There is also a lot of potential internationally if the product launches go right. And of course, the company’s 100+ franchise locations could bring in a lot of revenue if it can pull it off as planned.
The RTD coffee market is projected to grow at a 9.3% CAGR through 2030, so there’s solid potential here.All that said, a lot of bullishness is priced into the stock right now. The company is still not profitable. As per its Q3 report, “Net loss for the third quarter of 2024 was $0.7 million, compared to a net loss of $0.7 million for the third quarter of 2023.” “Cash and cash equivalents totaled $0.1 million as of September 30, 2024, compared to $0.2 million as of December 31, 2023.”
The stock could rise more, but with the above in mind, I’d exercise a lot of caution.