Boston Beer (NYSE:SAM) stock is falling on Friday and it has to do with the company betting too hard on hard seltzer.
Boston Beer’s earnings report wasn’t all it was hoping for. The company reported earnings per share of $4.75, which is nowhere close to Wall Street’s estimate of $6.85 per share. In addition to that, its revenue of $602.8 million also couldn’t reach analysts’ estimates of $665.25 million.
So what went wrong for SAM stock in Q2. We’ll let Boston Beer founder and chairman Jim Koch explain the problem.
“Our 24% depletions growth for the second quarter decelerated from our first quarter growth of 48% and was below our expectations, as the hard seltzer category and overall beer industry were softer than we had anticipated.
Hard seltzer category growth was negatively impacted by several developments: (1) slowing growth in household penetration as the market matures and there is less new trial, (2) a gradual transition of volume to the On-Premise channel as hard seltzer becomes a more regular option in that channel, (3) new hard seltzer brands at retail that resulted in a proliferation of choices and consumer confusion, and (4) a challenging comparative period of significant pantry loading related to On-Premise restrictions in the second quarter of 2020.”
SAM stock is also seeing heavy trading today following the news. As of this writing, more than 1 million shares have been traded. That’s above its daily average trading volume of around 220,000 shares.
SAM stock was down 23.1% as of Friday morning and is down roughly the same since the start of the year.
Investors looking for more earnings news Friday will want to keep reading.
Quite a few companies are releasing earnings today and InvestorPlace has all the details. That includes Snap (NYSE:SNAP), and Socket Mobile (NASDAQ:SCKT), and we’ve got what else traders should expect from the market today. You can find all of that at the links below!
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On the date of publication, William White did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.