Buy or Sell This Recent IPO Stock?

BRC Inc. (BRCC) engages in the purchasing, roasting, and selling of coffee, coffee accessories, and brand apparel. The company also engages in the production of…

media content, print journals, and podcasts and offers coffee-brewing equipment and outdoor gear.

The company, known for its commitment to supporting veterans, intends to grow its online marketing efforts and aims to grow its product supply capacity. The company recently filed to open two new store locations, which aligns with its goal of 78 stand-alone locations in the United States by 2023. In May, BRCC filed for an Orlando location as part of its Sun Belt expansion aim.

However, BRCC’s stock has declined 1.87%. Here are the factors that could affect BRCC’s performance in the near term:

Recent SPAC Merger

On February 9, special purpose acquisition company (SPAC) SilverBox Engaged Merger Corp I, sponsored by SilverBox Capital LLC and Engaged Capital LLC, declared the closing of its business combination with Black Rifle Coffee Company’s parent Authentic Brands LLC. The combined company “BRC Inc.” started trading on the New York Stock Exchange on February 10 under the “BRCC” ticker. The combination was expected to provide approximately $150 million in cash. The company intended to use it to support its digital-first, omnichannel strategy.

Bleak Bottomline

For the fiscal first quarter ended March 31, BRCC’s net revenue increased 34.9% year-over-year to $65.84 million. However, net income decreased substantially to a negative $256.83 million. Net loss per share attributable to class A common stock came in at $1.36. Adjusted EBITDA declined 372.3% from the same period the prior year to a negative $6.21 million.

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Lawsuit

In May, West Coast investment company 1791 Management LLC filed a Securities Fraud and Market Manipulation Lawsuit against BRCC, charging the company with intentional violations of securities laws and fraud, which includes deliberate breach of contract, breach of fiduciary duty, and negligent misrepresentation.

POWR Ratings Reflect Bleak Prospects

BRCC’s POWR Ratings reflect this bleak outlook. The stock has an overall rating of F, equating to Strong Sell in our proprietary rating system. The POWR Ratings are…

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