What Happened?
Shares of beverage company Zevia (NYSE: ZVIA) jumped 3.6% in the after-market session after the stock rose amid a broader market rally as the head of the Federal Reserve hinted at potential interest rate cuts. The broader market surged on Friday after the head of the Federal Reserve indicated that interest rate cuts could be on the horizon. This signal boosted investor sentiment, leading to a significant rally across major indices, including the Dow Jones Industrial Average and the S&P 500. Lower interest rates generally stimulate economic activity and can make stocks more attractive to investors.
After the initial pop the shares cooled down to $3.06, down 1.1% from previous close.
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What Is The Market Telling Us
Zevia’s shares are extremely volatile and have had 71 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 9 days ago when the stock dropped 3% on the news that the company disclosed an equity distribution agreement for the potential sale of up to $20 million of its Class A common stock. The arrangement, known as an "at-the-market" offering, allows Zevia to sell shares from time to time through Piper Sandler, which will act as the sales agent. Such announcements can concern investors because the sale of new shares increases the total number of shares outstanding, potentially diluting the value of existing holdings. This potential for dilution often puts downward pressure on a stock's price. The news overshadowed a recent price target update from Morgan Stanley, which maintained an "Equal-Weight" rating on the stock while noting its price objective suggested a potential downside from the stock's previous close.
Zevia is down 33.4% since the beginning of the year, and at $3.06 per share, it is trading 36.7% below its 52-week high of $4.83 from January 2025. Investors who bought $1,000 worth of Zevia’s shares at the IPO in July 2021 would now be looking at an investment worth $223.81.
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