Black Rifle Coffee Stock May Look Tempting, But Wait Until the Price Retreats

Black Rifle Coffee (NYSE:BRCC) stock is losing steam after its red-hot debut via reverse merger. The sell-off in growth stocks is affecting the coffee company.

The facade of the New York Stock Exchange is decorated for the listing via a SPAC of Black Rifle Coffee Company (BRCC)
Source: rblfmr / Shutterstock

The coffee company went public on Feb. 10, but investors have been moving towards safer stocks. That is why cryptocurrencies and explosive growth stocks have not done well this year.

There are investment opportunities out there for those who are willing to be aggressive. Some of the most successful trades in finance history were made during a recession.

Black Rifle Coffee Company is veteran-owned. They sell organic coffee and related products, including coffees, syrups and chocolates. Evan Hafer founded the company in 2014 after serving as an Army Green Beret in Afghanistan and Iraq.

Black Rifle Coffee still has a close connection to the military. They made national headlines when they vowed to hire 10,000 veterans in 2017. The company’s decision came as a response to Starbucks (NASDAQ:SBUX) wanting to employ 10,000 refugees.

Their focus lies primarily in their coffee subscription service with more than 100,000 monthly subscribers. This company only has a few physical coffee shops in Utah and Texas.

After a special purpose acquisition company (SPAC) debuts, there is the potential for a significant drop in value. Jumping on BRCC stock right now could lead to losses.

A lot of people are against progressive capitalism. They also have money to spend, and the markets are taking notice. For example, not everyone likes the politics surrounding Palantir Technologies (NYSE:PLTR) and Digital World Acquisition (NASDAQ:DWAC), but that has not stopped investors from pouring capital into these vehicles.

BRCC has been around for a long time, and it’s got a long list of happy customers. They advertise like nobody else we saw – they were good at tapping into military humor while also connecting with the younger demographic.

Building a Loyal Consumer Base

Investors are encouraged to invest in Black Rifle or other companies supporting the cause. It would also be beneficial to investigate how much the company is worth and whether or not it’s making a profit.

This company still makes most of its money online, which drives revenue better than in-store sales.

The value of the direct-to-consumer coffee business in the U.S. has been estimated to be around $4 billion annually. Therefore, even if you get a small chunk of that market, things will improve dramatically for the company.

The coffee itself is of high quality. All Black Rifle Arabica beans have a grade of 83 points or higher (according to the SCAA – Specialty Coffee Association of America), and the coffee is noted for its balance. A 12oz bag of Black Rifle coffee beans ranges from $14.99 to $25 online.

Black Rifle’s top-line results are looking good, with a compounded annual growth rate of 67% between 2019 and 2020 and a 37% CAGR expected from 2021 through 2023.

Therefore, while the size of its business does not compare with Starbucks, it is still progressing in the right direction. If you want to learn more about the company’s financials you can check out a great article from my InvestorPlace colleague Thomas Niel.

Wait for BRCC Stock to Cool Down

What sets Black Rifle Coffee Company apart from other companies is its political stance. While Starbucks might lean neutral or slightly liberal/progressive, the company’s brand of conservatism is unmistakable, with their support for Second Amendment rights steeped in American tradition dating back to colonial days on these shores.

The company has a long-term hiring goal of 10,000 American veterans. With this initiative, it’s not inconceivable that BRCC stock will attract a small but loyal following of customers.

As Black Rifle doesn’t have the aggressive marketing budget of Starbucks, investors will have to hope their military-focused following continues to grow and that this can be profitable for them in the future.

It will be a while before they can break even and provide earnings growth, but it looks like they’re headed in that direction. But you will have to wait for a more reasonable valuation before investing in BRCC stock.

On the publication date, Faizan Farooque 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.

Faizan Farooque is a contributing author for InvestorPlace.com and numerous other financial sites. Faizan has several years of experience in analyzing the stock market and was a former data journalist at S&P Global Market Intelligence. His passion is to help the average investor make more informed decisions regarding their portfolio. Faizan does not directly own the securities mentioned above.

Faizan Farooque is a contributing author for InvestorPlace.com and numerous other financial sites. Faizan has several years of experience in analyzing the stock market and was a former data journalist at S&P Global Market Intelligence. His passion is to help the average investor make more informed decisions regarding their portfolio.


Article printed from InvestorPlace Media, https://investorplace.com/2022/03/brcc-stock-may-look-tempting-but-wait-until-the-price-retreats/.

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