Last Minute Delay
Unexpectedly after today's market close, plant-based food company Tattooed Chef (NASDAQ: TTCF) announced that it would be delaying releasing its third quarter financial results and accompanying earnings call. This news came as a shock to investors, who were expecting the call which was scheduled for today after the market close. Amid this uncertainty and delay, shares ultimately fell 4.82% in the extended session -- closing at $16.40 per share. The company issued a press release and stated that "the delay is a result of additional time required to finalize the Company's financial statements, and the Company will make a further announcement regarding the timing of the release and conference call as soon as practicable."
Known Material Weaknesses
The delay really should come as no shock to those who follow the company closely. In their last 10-Q (quarterly report), dated August 16, 2021, the company acknowledged six material weaknesses relating to the company's financial reporting:
Prior Accounting Department Snafu
This isn't the first time there has been a red flag from the accounting department at Tattooed Chef. In April 2021, Chuck Cargile - CFO abruptly resigned with no clear explanation. As expected, shares fell sharply on that news. Investor Relations later went on to explain that Mr. Cargile and the company mutually agreed to part ways, and that he had performed the job he was brought in to do: helping the Tattooed Chef transition from being privately held to publicly traded. That may still be up for debate in the eyes of Wall Street and investors alike.
Recent Developments
The company announced its acquisition of Belmont Confections, which it plans to use to enter the plant-based snack bar market. The $18 million purchase will add approximately 220,000 shares to the total shares outstanding count. CEO Sam Galletti on the acquisition: "Belmont also accelerates Tattooed Chef’s expansion into ambient and refrigerated products in a new category. We believe this transaction will open up more sales channels including convenience stores, vending, drug and dollar, and more. At full capacity, we believe the Belmont facility can contribute over $100 million annually in revenue in the next two to three years.”
The company has also announced the availability of its products in Publix Super Markets. Tattooed Chef has exceeded its goal of being available in 10,000 stores by the end of 2021 as Publix puts their products in over 13,000 stores across the United States.
What's Next?
The first thing investors will want to see is when Q3 earnings will be announced. The deadline to remain in compliance with SEC guidelines is approaching, so the Tattooed Chef must release their earnings soon. There are a variety of reasons why the delay may have been announced: staff inexperience, a computer crash or other technical issue. One can only speculate at this point. What is clear is that the Tattooed Chef has some work to do, with regards to its accounting department.
As for the stock, the road ahead definitely looks rocky -- especially until a release date for Q3 earnings is made public. The share price could continue to decline on the uncertainty, as markets despise the unknown. While Q3 results are required to confirm continued revenue growth, the expansion plans are being executed -- as made evident by expanded store count and two acquisitions so far in 2021. The Tattooed Chef is still a growing company and is not exempt from the growing pains that come with it. Investors should expect more bumps in the road and a volatile stock going forward.
This blog post represents my opinion and is not financial advice. I am not a financial advisor, just a rocket enthusiast. Always perform your own due diligence and any trades/investments you do is at your own risk. I hold shares of TTCF.
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