Jones Soda Co.(NASDAQ:JSDA) shares closed Friday at $1.40. They hit 48 cents in the past 12 months, but they are not out of business. They have fallen 95% since 2007 when they were close to $30.
Now the stock trades at a level similar to where it was when it first went public in 2003. It took Jones almost three years to get above $1 a share. It’s as if the company is starting all over again trying to prove to Wall Street that it is more than just an underground soda company.
The story of Jones Soda began in 1987 when company founder and president, Peter van Stolk, recognized the potential of emerging “alternative” products in the beverage industry. The pure cane soda company has changed much in its history, cutting almost 40% of its staff two years ago. Jones has changed its CEO four times in the last three years. The company managed to dodge the $7.95 million buyout from Big Red Holdings Corp. Then came the offer from Reed’s to buy Jones Soda for $9.8 million last March. Once again they managed to dodge the takeover bullets, switching the CEO (picture Neo from the Matrix in the bullet time scene) and a year later we all forgot about it. Jones Soda Co. refuses to go down, they are the “little soda company engine that could“.
JONES IN 2011- FINDING MONEY
Last month Jones Soda Co. managed to find $2.3 million in financing with the sale of 1,596,773 shares of its stock to Glengrove Small Cap Value, Ltd. (Glengrove) at around $1.41 per share. Tack on the 3,632,120 shares Jones recently sold for approximately $4.1 million and the company finally had something positive to say:
Bill Meissner, Jones Soda’s CEO on Jan 31st-– “We are pleased to have completed the use of our equity line facility…This financing tool will terminate with us having raised total capital of nearly $6.4 million. The facility was an important financing option, allowing us to raise the capital we need to go forward through 2011 and support strategic growth which we believe will result in a significant benefit to our shareholders.”
Meissner is the latest CEO of Jones Soda, he has an impressive resume and is a 16 year veteran of the beverage industry. Recent positions have included Brand Director at SoBe Beverages and PepsiCo, Chief Marketing Officer of FUZE Beverages and Coca-Cola, and President of Talking Rain Beverages in Seattle.
Five year chart for Jones Soda (JSDA): |
Since the start of 2011 Jones shares have increased 17% and got as high as $1.77 last month, the stock is subject to volatile swings with the average volume at 760,000 shares traded daily. We will hear from the company on March 10th, when it discusses financial results for its fourth quarter ended December 31, 2010.
KEEPING THE FAITH
If anything Jones Soda and the entrepreneurial spirit of what van Stolk started back in the 80’s is still very much alive. Its products can be found all over the United States, from 7-Eleven to Wal-Mart and they can be customed ordered with your own picture and message printed right on the bottle. Its soda flavors range from Blue Bubble Gum to the new limited edition Dungeons and Dragons flavor Bigby’s Crushing Thirst Destroyer. Jones Soda is a fun company but that doesn’t translate to good investment. Its tempting to buy stocks that trade under $5, and this one trades for less than $2. Do the math, you can buy 1,000 shares for under $2K, however what does that get you?
Jones Soda may never reach $30 a share again, but its stock could double from today’s value if the company can prove it can grow revenue and keep a single CEO for longer than two years.
The issue here is that Jones did have Wall Street’s backing back in 2007, but like any momentum stock it becomes dangerous when it grows too far too fast. Jones Soda would be better off as a private company. The scrutiny of trading as a public company has all but killed it.
Bottom line: Jones Soda has to show to investors it can make a comeback, otherwise its just another small business with a fun concept.
Frank Lara Jr
The author has no positions in any of the securities mentioned in this publication.
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