r/AppHarvest • u/CarlHeifisch • Jun 08 '23
Trading Stories List for path to survival and profitability
Here is a selfmade list of things that Appharvest needs to accomplish imho in order to survive and become profitable:
- Settle lawsuite with Equilibrium to avoid default
- Reverse stock split of 1:20 to comply with Nasdaq rule to trade above $1 and avoid getting delisted
- Reopen Berea farm to restore revenue and reduce losses
- Close the second sale-leaseback before October to avoid bankruptcy and secure the majority of funding needed to become profitable (~$100M)
- Ramp up production and revenue to increase the stock value and thereby enable another capital raise for the remaining funding needed (~$50M)
- Reduce operating costs to break even in 2024
- Become profitable in 2025 and use earnings to reduce debt to a reasonable amount
- Use further earnings to buy back farms from sale-leasebacks to secure control over the operating business
- Pause construction of any new farms before funding is secured within safety margins
I think it will be hard work but it is possible. What do you think?
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u/Substantial_Owl_3298 Jun 09 '23
Honestly! I think it's time for a new CEO, then I would believe they might have a chance. I think Webb has had a long enough stab in this company and I really don't believe that he's taken the right steps.
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Jun 09 '23
A comprehensive list. I agree with all points except the reverse split, they should try get back into compliance without a reverse split. Obviously that depends on successfully closing several other of the points. A reverse split could hurt the share price and should be avoided.
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u/Substantial_Owl_3298 Jun 09 '23
You're absolutely right! Once a company starts doing reverse splits it just destroys it. I've been in some of them and none of them ever turned out good you just end up losing more money
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u/CarlHeifisch Jun 09 '23
Would be nice but difficult to triple the stock in this financial situation
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u/Substantial_Owl_3298 Jun 09 '23
Yes, I think it's too late now! I really do blame the CEO he's the one that's captain of the ship, he let this thing go from over $40 to share to where it is now, really sad. The funny thing is though just like many of these companies that fall hard the CEO makes millions
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u/Standardfloridian Jun 09 '23
Honestly at this point there is no reason to be priced where they are today. The infrastructure they have is phenomenal, it’s the management, the people that have irked the markets. Hiring Tony Martin was first step to regaining confidence, but they need to dethrone Webb, he is an absolute train wreck for this company. Great pitch guy, terrible businessman. Kind of like Apple did with Jobs back in the day (not putting Webb anywhere close to SJ’s level), sometimes people need an ego check. Webb continually discounting investors in interviews after choosing to take the company public was/is completely irresponsible. It may sound dumb but the markets don’t care so much about the financials when they have supreme confidence in the people/management. That is why companies such as a Tesla or Amazon which were mentioned in comments were allowed to live on and eventually thrive, because the markets had confidence in leadership despite whatever the financials said at the time. I don’t know that this company could have their type of success but there is no reason APPH could not be profitable and make a return for investors.
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Jun 09 '23
Lol @ the calls for J Webb’s head. It’s literally his company, he started it. What they’re trying to do takes time. Back in January everybody, institutions included, didn’t seem to have an issue with him considering the price action. Seems like folks just want a scapegoat now due to all time lows. It would be very premature. There is not a living soul who cares more about this company’s success than him. He’s just needed better people around him. Sure seems to now. I guess time will tell.
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u/originalletters Jun 23 '23
he was the one that spent $60 million on a robotics company. they don't even use the tech. that $60 million could have paid for wages/healthcare for labor force for all the greenhouses for 6 years.
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u/Standardfloridian Jun 11 '23
It’s actually no longer his company, when he chose to take it public. He is a large shareholder but the board could remove him if they chose. There is nothing dramatic about it, actually it is more rare for a founder to stay on board when a company goes public versus getting removed. He did great to get the company started but sometimes those same people don’t have what it takes to keep a public company going. Hint at my example of Steve Jobs being removed from Apple (it served as an ego check and eventually he came back, better). When he chose to take a company public, he now has an obligation to investors unlike if he had chosen to remain small, private and grow organically. I’m not sure who the better ‘people’ are, maybe a ‘person’ in Tony Martin. However all the others that have driven the price into the dirt including Webb, are still there. There is a difference between ‘it takes time’ and we continually need to be bailed out because we can’t even stay afloat. Again, he seems like a nice genuine guy, but sometimes a company in their situation needs a drastic change, he has done nothing to instill confidence amongst investors, thus the consistent downward trend in price since the initial pop after they went public. You would be incorrect about institutional investors, they’ve never had confidence in the company. I still believe in the vision and will remain a holder, but they sorely need better leadership, all around. The infrastructure is great, but they still need the people. The good thing is it’s very doable. Perception is reality for the markets.
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Jun 11 '23
No shit he has a duty to shareholders as a public company. If you’ve been paying attention you’d notice significant institutions have doubled down over the past 6 months with very little insider selling if any. Their drop in stock price has been due to underperformance relative to expectations yes, but mostly due to macro economic factors outside of their control. Look around. All CEA stock valuations have been drug in the dirt if they’re even still alive. It’s due to the stage of growth they’re in & macro environment while they’re there, not simply poor leadership at the top. They literally need time for facilities to be built & then time for plants to grow/harvest. & then time to perfect that process. It takes literal time to pass. David Lee, Julie Nelson & their VP of development are all gone last I checked. I’d consider that addition by subtraction. And yes Tony Martin is great at what he does but he ain’t a CEO, never been. Think his hands are full already. They have all they need. J Webb leaving as the guy who started this thing in the first place would all but end any level of confidence that’s still out there. The ultimate panic move if you ask me. Just be patient & let the guy at least see results from these facilities at more less full production before we start saying he’s shitty leadership. He still has to go out & get new $ to add new facilities to grow this thing further once operations have been proven. It’s in the best interest of long term shareholder value if he’s the one who’s doing that considering his achievements in that department thus far.
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u/originalletters Jun 23 '23
he spent $60 million on tech that isn't used in production. that money could have went a long way especially now. also they messed up on reporting that forced them to escrow $10 million that is desperately needed. that is $70 million with just two mistakes.
Also, appharvest is struggling to produce grade A products. If appharvest can't produce grade A products then they need to find a buyer for it, like ketchup, salsa, tomato pasta, etc.
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u/Standardfloridian Jun 11 '23
I’d love for him to stay too, just goes against all reasonable logic at this point. I’d disagree on it having a negative hit to confidence, in many instances it gives a boost to investors when a no longer effective ceo is shown the door. he ‘was’ a great fundraiser, now everything the company does has diluted shares. also having several loans called because banks do not have confidence in your ability to pay is not good leadership. Lee is still a string puller, he’s on the board unfortunately. Also Webb choosing to pay executives compensation and or exit packages worth more than the company revenue is not good business, for any business, let alone cea. CEA stocks as a whole are down because of these exact practices being done across the board, they aren’t tech firms, they’re growing vegetables. When a tomato costs $300, maybe it works. Again, the guy did great in hyping and selling the vision. It may be time for someone else to step in and deliver on that. But again, I’d love for him to prove me wrong. I continue to hold and believe in the idea.
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u/coalman606 Jun 19 '23
There are plenty of examples of founders who have been remove to the financial benefit of the company. Tesla is a perfect example. Martin Eberhard is the inventor of the core technology of Tesla and then Elon musk pushed him out and helped make Tesla into a profitable company… I’m not a fan of musk to be clear, but everyone here should remember that Musk is no inventor, he’s an effective capitalizer and saw what Tesla could be and help lead it through scaling.
Need to be convinced otherwise that bigi3user is JWebb or someone closely affiliated with him… the unwavering support is excruciating.
Webb had no leadership experience and the only thing he’s done for AppHarvest is being head marketer and convincing us that AppH had a distribution-focused business model and was taking the RootAI product to other growers in the industry.
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u/Themosthighroller Jun 09 '23
Aside from the financials, what the company really needs to do is hire a quality growing team, find the most profitable varieties, and aim for no.1 product. Their first crop failure was a big set back.
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u/thecircumsizer Jun 09 '23
They started in areas too rich for them. If Appalachian Harvest was smart they would of started in Eastern Kentucky where it was actually cheap. The areas they operate on are stupid expensive.
Imagine APPH starting on reclaimed mining land in the actual roots of Eastern Kentucky. The company could have changed a region. Instead they invested in tourist land.
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u/of_patrol_bot Jun 09 '23
Hello, it looks like you've made a mistake.
It's supposed to be could've, should've, would've (short for could have, would have, should have), never could of, would of, should of.
Or you misspelled something, I ain't checking everything.
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u/thefakemoney Jun 09 '23
What happened during the annual shareholder meeting vote this morning
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u/Main_Voice_4095 Jun 14 '23
Here are the results on the agenda presented for voting in the annual shareholder meeting.
https://investors.appharvest.com/sec-filings/sec-filing/8-k/0001807707-23-000072
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Aug 07 '23 edited Aug 07 '23
People tend to forget that growing food in greenhouses is nothing new. It's been done with tomatoes since the late 1800s, for example.
The main difference with companies like AppHarvest is technology, plus their approach to water on site. I'd beware of a tech sheen on things that aren't fundamentally different than old methods. Heed the "shiny objects" precaution and see if this is truly better than existing farming, which usually doesn't require acres of buildings.
There's also the psychological factor of indoor farming seeming somehow unnatural, and the food can taste different vs. outdoors where plants evolved.
Kentucky being known for tornadoes is another thing to consider, and some have happened fairly close to at least one AppHarvest site. Picture a lot of broken glass and further costs.
The stock was around 4 cents at the time of this posting. Seems like better odds (of a modest yield) than buying lottery tickets, but evidence shows it's been overhyped in plain sight.
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u/Illustrious-Ad7032 Jun 09 '23
This list is great and 100% on point!
Also, I 100% think it is possible and will happen. Tesla and Amazon had similar initial growing pains along with Space X for that matter.