Amplify Snack Brands (BETR) put something of a floor on its valuation when it undertook an IPO in the summer of 2015 of $18 a share. It's a floor, though, that it's crashed through repeatedly in the roughly 15 months that it's existed as a public company, none more dramatically than it did Tuesday following a disappointing quarterly financial performance, prompting the stock to fall 24% in a single trading session.
The question becomes, unsurprisingly, where does Amplify, the maker of Skinny Pop brand of popcorn and other snacks, go from here, and—more critically—what can investors expect of a stock that's trading at a nearly 90% discount to the IPO it priced just 15 months ago?
The natural expectation: It's a takeover play. "I think it's definitely a candidate" for a takeout, Eric Gottlieb, an analyst at D.A. Davidson, said in an interview Wednesday. And given that it priced that not-very-long-ago IPO at $18 a share, that's probably the minimum that Amplify management and investors, including private equity firm TA Associates, is going to expect.
However, for individual investors who are maybe thinking that a potential 90% return looks more appetizing than an over-flowing bowl of popcorn, there's a caveat: that return won't be immediate. In fact, it could take quite a while.
The earnings shortfall probably caused more reputational damage to Amplify than genuine financial shortcomings. "I think people are going to put the company in the penalty box until management has proven it's fixed its problems," Gottlieb said.