Kona Gold KGKG stock is a cannabis stock that I have been wanting to look at for some time including the KGKG stock forecast. Kona Gold Beverage has a few different products to include all-natural, sugar-free lemonades, hemp-derived energy beverages, and CBD beverages. Normally, I limit myself to THC pure-play cannabis stocks. However, I there are a few CBD product companies that I follow. Kona Gold KGKG stock has a lot of potential upside given recent moment. For these reasons, I wanted to get the Kona Gold KGKG stock forecast up onto the site as a basis to start.
One of the things I can appreciate about what Kona Gold is doing is the licensing and strategic partnerships they are building. First, the Ooh La Lemonade product appears to be a great success – I have not tried it myself. These beverages are starting to make it onto the shelves of Walmarts; the world’s largest brick-and-mortar retailer. For now, especially near me, most Walmarts are only offering the product via +3-day shipping. However, some Walmarts are starting to carry Kona Gold Beverage products and, I can only assume product awareness will drive revenue higher.
Recently, KGKG stock shot up on the news of the Walmart deals. KGKG stock moved from sub $0.005 all the way up to $0.03 per share, moving up over 500%. Will KGKG stock rally again?
While the numbers do not add up to a screaming buy at this time, let me break down a possibility that may make you see what I am looking at.
Beverage distribution deals & Kona Gold Beverage Company
The Coca Cola Company – aka Coke – is well regarded as one of the world’s most successful beverage companies.
Question: How much beverage does Coke produce?
In the 1980s, Coca-Cola Beverage and Coca-Cola Bottling were broken into two separate companies. Bottling then did all of the manufacturing and bottling of all of Coca-Cola’s products. Coca-Cola owned the labels and was paid royalties but Coca-Cola Bottling every time Bottling put something on a shelf. Bottling did all of the heavy lifting. Beverage did all of the easy work of creating one television ad and showing it to billions of people to entice them to buy their beverages. Then, they got royalties from Bottling. Over. And, Over. And, Over… again and again.
Guess what? Kona Gold Beverage is acting just like Coca-Cola Bottling did decades ago. Kona Gold is getting distribution agreements with various distributors around the United States which are doing the dirty work of putting bottles on shelves of convenient stores around in areas that they are already distributing to.
This is a win-win for the two companies because Kona Gold Beverages are starting to get very popular. Kona Gold gets a low-cost method of distribution and distributors are getting popular labels.
Then, there is the potential of KGKG stock holders getting that win.
Kona Gold KGKG stock sending higher
I like the mechanics of what Kona Gold is doing. All of these distribution deals and strategic partnerships are very important for spreading potential all through the country. And, KGKG is sitting at ultra-low levels which potentially means the upside is enormous.
Basically, with these partnerships, Kona Gold has no real costs since they are not doing any of the dirty work. Kona Gold will want to do whatever it can to promote its products such as the Ooh La Lemonade. The will do this just like Coca-Cola does one television commercial and promotes it to billions of people.
There will be marketing costs, for sure. But, those costs are minimal.
One commenter mentioned that to him, getting into Kona Gold KGKG stock now was like buying Snapple just before its big moves upward. If that is the case, the sub $0.01 stock price will look like a dream come true for anyone looking for an explosive opportunity. If an investor put a mere $100.00 into this and sat on the shares without much care, it may be that the stock price shoots up to $1.00 in the next 2.5 years and that investor would be sitting on a 9,900% return. Imagine dropping in more than just $100.00, such as $1,000.00, or $10K?
It may be that KGKG stock is a millionaire-maker.
But, for now, the numbers certainly do not show that. And, that may be why KGKG stock is a sleeper that could be a millionaire-maker.
Kona Gold Financial Data
The latest financial data for Kona Gold Beverages would not necessarily show the latest potential with some of the distribution deals they have recently signed. Furthermore, Kona Gold Beverage is actively seeking out even more deals looking to hit approximately 6 more states by the end of this year.
Kona Gold Gross Profits
Any distribution deals are going to come in as top-line revenue. These distribution deals will come with minimal amounts of cost of goods. However, there may be up front costs associated with production. Still, as Kona Gold starts to sell more and more beverage products through these deals, and with their cost of goods as low as it will be, Kona Gold will easily get ahead of the curve and be able to capitalize moving forward.
For now, expectations are for some $15M in revenue this year. However, there are new deals being signed and it may be that the $15M gets passed by. As there will be minimal costs associated with the revenue, the bottom line will grow quickly.
Kona Gold Operating Profits
Assuming increasing revenue, and if Kona Gold can focus its efforts only on the sales portion to increase revenue, operating costs should remain contained as Kona Gold increases distribution deals and further drives revenues higher.
Since it is a ratio driven by cost, my expectation would be that operating costs relative to revenue will remain contained and, operating efficiencies will improve accordingly.
Kona Gold EBITDA & Net Profits
Along with the rising revenue, with costs contained, EBITDA and net earnings should continue to improve over time. Since there will ultimately be no costs associated with the distribution deals, outside of the initial input costs of launching a distribution deal, any sales will enable capital gains and increased profits.
I will continually update my thoughts when we start to see the numbers show up in future. ports. re
Kona Gold Cash On Hand
Inking a new deal does not mean pure profits and no cost. Instead, there are up-front costs. When Kona Gold signs a deal with another company for distribution, that firm will want an up front amount of working capital to create the product. Then, the distributing firm will have product to distribute; it is not entirely on them.
Kona Gold needs a bit more working capital. I expect they are going to be able to partner up with other distribution companies and, this will mean more capital will start to roll in. First, however, there will be the initial investment money.
I have a feeling that Kona Gold will be able to get ahead of this smallish obstacle, however.
Kona Gold Total Equity
Assets are what drive a company’s ability to create revenue and, by extension, profits. Normally. But, when you license a deal out, this generates the potential of revenue & profits. However, this does not show up as an asset, despite the contract having value.
I would still want to see total assets increase. One of the things I am leery on is the fact that Kona Gold is under water. Normally, this hampers a firm’s ability to make moves.
Look for Kona Gold to do some kind of restructuring of debt and assets. This may actually mean more debt in lieu of income revenue from the licensing. However, if Kona Gold is hyper-successful, it is possible that they can get ‘ahead’ of the debt with revenue coming in.
Kona Gold KGKG Stock Forecast
In order for me to put together any Discounted Cash Flow Calculations, I need a company to either be at EBITDA profitability or, have a clear pathway forward. I would like to see how Kona Gold progresses forward with its growth and how that plays out. As I can see that there are opportunities with these deals, it may be that the stock meanders upward a bit but, this will ultimately be a stock that turns profitable.
Is Kona Gold KGKG Stock A Good Investment?
Warren Buffett, the greatest value investor ever, bought tons of Coca-Cola Beverage. In fact, at one time, it was Berkshire Hathaways biggest holding. There is a reason why he did this: The company makes a lot of money without doing a lot of work.
Kona Gold Beverage is one of these companies that is lining up to be very profitable without much effort going in to it. With the partnership & distribution deals, revenue from licensing is going to start coming in. Revenue gains are looking to increase significantly very quickly.
Revenue gains are likely to hit approximately $5M a quarter very quickly. This will significantly alter the cost structure simply because there are really only minimal costs.
I have a feeling that a few events are going to transpire very rapidly and, with that, KGKG stock will head higher. Fast. It has already proven it can do that. If cannabis federal legalization hits, and revenue increases hit with Kona Gold distribution, KGKG stock is a stock that could very seriously take off running. Fast.
However, the one thing I am a little leery on is the fact that debts far exceed assets. It may be that profits get ahead of the debts and, this becomes a non-event.
6 thoughts on “Kona Gold KGKG Stock Forecast & Analysis”
I have a question for you. KGKG has 1.6 billion outstanding shares with a 1.5 billion float per Wall Street Journal. With little cash on hand won’t they be forced to do a reverse split? Almost always a R.S. is detrimental to the share price, especially in a bear market. Of all the cannabis stocks I own this one gives me worry. Your thoughts are always appreciated?
No, not necessarily. First, they will be able to raise capital via debt which, that will give them necessary working capital. Then, if things work in their favor, maybe they uplift to Nasdaq. That would get them to reorganize their share count. They would likely target $7.50 at that point. That would push them to diminish their share count. But, they would not be forced to do this with OTC.
Thanks for the feedback, but I’m not sure I understand how that process works. Maybe you could do a short video on debt restructuring vs reverse splits for us accounting novices. Thanks again
Hey Gary… I am actually launching a new TikTok series where I explain all sorts of economic and value investing terminology. I will be including them into the encyclopedia that I have been slowly building up here on the site. I will make certain to talk about stock splits (and why) as well as reverse splits (and why).
Great video analysis D.H.
short selling with this stock is like most, kind of heavy fora few days, then light day or two, likley covering then it picks back up for a few days, and that cycle repeats itself for most stocks.
The difference I see that sticks out for KGKG is how agressive the short sellers increase their short sellig when buying volume increases. for long term value investors, no big deal, but for traders, it can mean huge price swings daily.
I cant see todays short selling, I dont watch it that close. I do think todays short selling incresed with buying volume, not enough to drive share price down, not yet anyway.
Here is most recetn otc short report on KGKG. I will post tomorrows if avlailable tomorrow, to show my points I am trying to make. If you look at th data below you can see how the daily short selling volume goes up and down with total volume for the day. In the last few trading days it looks like short sellers are nervous to me! they should be! why do I say that, well the short volume is pretty close to the same when daily volume moved quite a bit in last 3 trading sessions. I have never noticed that before, but I am not an expert, and I dont study short selling of every stock I invest in daily. I am typiclaly a long term value investor, as well asvalue and growth. However, I like to make monye like anyone, and if trades fall in my lap, I will jup in and out “hit & quit” or however D.H. phrases it, and reload on dips.
Historical Short Volume Data for KGKG
% of Vol Shorted
Nice, Gary… I think this is a cherry pick of very low-lying fruit at this bottom. Seriously. These valuations are beyond absurd.