Much like a new relationship, the initial passion period is unforgettable. As it continues to develop, stabilize, and mature, you’re usually quite happy…
However, there is something about that first phase, before lust turns to love, that makes people feel like they’re completely outside of themselves.
While many can get caught constantly chasing these highs, occasionally you land in the right place, with the right person and suddenly, this need for a short-term rush is replaced by long-term contentment.
While it’s easy to miss the honeymoon period, it becomes far overshadowed by the joy of finding the right person that fits into your life like a puzzle piece. By realizing that you’ve captured something special for the long run, you wouldn’t trade that feeling for anything else.
The transition is hard, though. Normalcy creeps in, cravings for that early-day excitement presents itself, and there’s a part of everyone wondering if they should be chasing the next one.
So, I can imagine upon the end of the honeymoon period of any aspect of one’s life, they may find themselves asking the question…
Where do we go from here?
It’s A Pretty Good Time for A Disclaimer
Unfortunately, I’m not going to be talking about a potential life partner today, I’m going to be talking about The Very Good Food Company’s stock.
Arguably the talk of the Canadian market in 2020, Very Good Food Company blasted through the market from its debut in June and onwards. Only calming down to sit at around 600% of its IPO price for a few months, the company’s evaluation ballooned another 600% from October to December, peaking at a staggering $750 million market cap at its all-time-high. One can only imagine what a rush this period of the company’s life was for any investor.
Sitting comfortably at a valuation of half a billion dollars, Very is cruising at a 2400% premium to its offering price only 8 months ago. With constant updates rolling in, including the acquisition of 3 new facilities, planning the move into a California warehouse, and the outright purchase of an entire plant-based cheese company, things seem to be going better than ever. Revenue is increasing, debt is being eliminated, their products are popping up everywhere, and their reach is spreading like wildfire.
But there’s a segment of the audience that’s getting antsy...
The day traders, aka, the flirts of the dating world. They’re looking for short-term commitment, new excitement around every corner, and don’t want to learn about the fundamentals. Let’s compare them to the long-term investors, aka, the relationship-type folk.
Traders Vs Investors
Also known as active investors vs passive investors.
If you had been holding right from the beginning you would likely be laughing, although, there may be some sense of struggle to figure out when and if you should sell, and at what price.
If you are strongly experiencing any of these feelings, you’ve awakened the trader in you.
Traders are in a way, like chronic daters. They prefer to bounce around different companies (or dates) and take advantage of the growth period. Knowing there will always other stocks to take part in, traders prefer to move their capital around into early-stage, often pre-public companies in order to capture the higher relative growth of valuations. While this is lucrative, it requires a lot of active research and networking, and can pose significantly more risk than long-term investing. This style of active investing, when done correctly, is venture capital in a nutshell.
A successful venture capitalist has a good nose for the quality of an IPO and a deep understanding of what makes a start-up company successful in their market debut. In addition to knowing when to enter, it’s also critical to know when to exit. Even the greatest ranking of IPOs with the most promising business models can carry a substantial amount of risk. The high return potential of an early-stage company is never completely void of risk.
Trading, or active investing, isn’t just limited to the adolescent phase of a company. Plenty of “traders” focus on market momentum (rapidly trading in-and-out, moving with the trend of the market), and event-driven analysis (looking for catalysts and events that may influence the share price).
Investors on the other hand, as the common saying goes, “get paid to wait,” and boy, can waiting pay off.
Some of you may have invested into The Very Good Food Company with confidence in the company’s filings, financials, and evaluation, and have a fondness for all things plant based. You are thrilled to park your
If the above applied to you in any way, you may have investor tendencies.
Investors think with long-term goals, and thoroughly look past share price to establish their take on a company. Not fazed by price movements, investors only invest in a company with utmost confidence, rather than looking to feel a thrill upon seeing chart movements.
Is Very a Stock for Traders or Investors
Let us begin by saying that we don’t believe that anyone can be 100% on either end of the spectrum. Everyone has some trader and some investor in them; it’s your overall market outlook that determines whether your trading style best suits active investing or passive investing.
Many traders took a happy exit around $2.00/share. What a rush it must have been to catch an IPO on an 800% tear. As the valuation settled down, many shares were passed on from the hands of speculators to investors and believers of The Very Good Butchers. As loyal shareholders, new and old, stayed put, the company was brewing up retail expansion plans, ecommerce strategies and silently plotting acquisitions.
Countless times, we have seen shareholders get antsy after a company’s share price settles down from a timely surge. Months went by before investors saw any action remotely close to what they had seen from the company’s inception. It was very clear that The Very Good Food Co. was a strong company. Their management proved to be as capable as ever. Their growth plan was not only tactical, but crystal clear. Owning shares of this company started to feel like more than just a lucky, speculative bet on a new company in a hot sector… but were sound fundamentals enough? Or did the market already have its fun by sending this company on a ride and leaving it in the hands of bag holders?
Just as Halloween started to roll around last year, following a $10 million financing that became oversubscribed in mere days, the party had really just begun. Those who made the seemingly strategic sell at $2.00/share suddenly saw their old position reach nearly five times the price of their exit, before settling down to a half-billion-dollar market cap.
Another interesting thing that a lot of the market seems to be missing is: The Very Good Food Co. is still an early-stage company. Just barely cracking the surface of the west coast with their small handful of production facilities and loads of room to grow with their extensive ecommerce partnerships, the potential of this plant-based future giant is still largely untapped. There’s a good reason that, after years of accepting minimum wage for their efforts, management is still holding onto almost all of their shares.
Everything about The Very Good Food Company that compelled you to take part in this budding food–producing powerhouse is still unraveling, as we progress closer and closer into witnessing these bean butchers really explode.
Disclaimer: The Very Good Food Company is an Edge Communications Client, and we own shares in the company.