What Happened?
Shares of beverage company Zevia (NYSE:ZVIA) fell 3% in the morning session after 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.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks. Is now the time to buy Zevia? Access our full analysis report here, it’s free.
What Is The Market Telling Us
Zevia’s shares are extremely volatile and have had 73 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 27 days ago when the stock gained 5.7% as the release of stronger-than-expected U.S. retail sales data pointed to resilient consumer spending and lifted consumer-focused stocks. The broader market rallied after a Commerce Department report showed U.S. retail sales rose a better-than-expected 0.6% in June, signaling robust consumer health despite inflation and tariff concerns. For a consumer-focused company like Zevia, which sells zero-calorie sodas and energy drinks, signs of a strong consumer are particularly encouraging as it suggests shoppers have more capacity for discretionary purchases. Also, the second quarter (2025) earnings season got off to a strong start. Quarterly earnings reports released during the week exceeded Wall Street's expectations, fueling investor confidence. Around 50 S&P 500 components reported, with 88% of those exceeding analysts' expectations, FactSet data revealed.
Zevia is down 34.7% since the beginning of the year, and at $3.00 per share, it is trading 38% 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 $219.41.
Today’s young investors won’t have read the timeless lessons in Gorilla Game: Picking Winners In High Technology because it was written more than 20 years ago when Microsoft and Apple were first establishing their supremacy. But if we apply the same principles, then enterprise software stocks leveraging their own generative AI capabilities may well be the Gorillas of the future. So, in that spirit, we are excited to present our Special Free Report on a profitable, fast-growing enterprise software stock that is already riding the automation wave and looking to catch the generative AI next.