What Happened?
Shares of coconut water company The Vita Coco Company (NASDAQ: COCO) jumped 6.4% in the afternoon session after the company reported strong third-quarter financial results that beat expectations and issued upbeat guidance for the full year. Net sales for the quarter grew 37.2% year-over-year to $182.3 million, easily surpassing analyst estimates of $158.3 million. The company's profitability also impressed, with earnings of $0.40 per share, which was well ahead of the $0.29 consensus forecast. This growth was supported by a notable 28.8% increase in sales volumes. Following the strong performance, Vita Coco provided an encouraging outlook, guiding for full-year Adjusted EBITDA of $92.5 million at the midpoint, which was above Wall Street's expectations. The strong top- and bottom-line results, coupled with the positive guidance, fueled investor confidence in the company's growth trajectory.
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What Is The Market Telling Us
Vita Coco’s shares are quite volatile and have had 15 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 2 days ago when the stock gained 4% on the news that optimism surged over a potential trade truce between the U.S. and China. Reports of progress in trade negotiations ahead of a scheduled meeting between the two nations' presidents fueled investor confidence. An agreement would likely ease trade tensions and reduce or remove tariffs that have created economic uncertainty and higher costs for many multinational corporations. Also, optimism improved on expectations that the Federal Reserve will cut interest rates later in the week, especially after recent data showed inflation wasn't heating up as much as expected. Simply put, good news on trade, and the promise of lower borrowing costs created a powerful rally.
Vita Coco is up 29% since the beginning of the year, and at $45.21 per share, has set a new 52-week high. Investors who bought $1,000 worth of Vita Coco’s shares at the IPO in October 2021 would now be looking at an investment worth $3,352.
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