In today’s choppy market session, Tattooed Chef (NASDAQ:TTCF) is among the leading decliners. At the time of writing, TTCF stock is down nearly 40%, as investors price in concerns around equity or debt raises by the company down the line.
A March 17 statement by the company highlights the need for an additional capital raise “as soon as practicable.” In this kind of fundraising environment, where higher interest rates mean debt financing is less welcome, that’s not a great thing. And if the company looks to tap equity markets, investors appear to be looking at other options, given the dilutive impact such actions can have on existing shareholders.
To make matters worse, Tattooed Chef is also restating its past financials. The company has announced via a Securities and Exchange Commission (SEC) filing that it will miss its SEC deadline to file its quarterly report. It turns out that restating past financials takes time. Accordingly, it’s unclear exactly when these financials will be posted. But until investors can see what’s being adjusted, it appears this is a “sell first, ask questions later” environment.
Let’s dive into what investors may want to make of these key news items.
What’s Going on With TTCF Stock?
Tattooed Chef is a plant-based foods business that saw incredible interest in 2020 and 2021 amid the surge in interest around these stocks. High growth rates, coupled with the idea that plant-based foods could disrupt the traditional grocery market, led to impressive valuations for Tattooed Chef and its peers.
However, sector-specific headwinds haven’t been friendly to companies in this sector. And with losses ballooning, this is a company that’s seen its valuation shrink to less than $75 million following today’s rout.
Most notably, today’s price action with TTCF stock has also sent this stock to a fresh 52-week low. The prospect of a capital raise in this environment, and accounting-related concerns, are clearly unattractive. Thus, investors looking to pick up beaten-down shares in this space appear to be considering other options.
Currently, cash expenses and net losses are two key areas investors will be watching when Tattooed Chef’s upcoming financials are released. Yet, until we have more clarity, this stock will likely see more downside pressure, at least over the near term.
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On the date of publication, Chris MacDonald 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.