AppHarvest: A ‘Feel Good’ Investment

AppHarvest: A 'Feel Good' Investment

Summary

AppHarvest share price has been in a long period of decline, and is well below initial listing price.

The share price suffered another decline of 14.61% on March 8, and I see potential for further declines.

Management appear highly capable, the product appears to be of high quality, with a ready market, and excellent from an environmental standpoint, but that does not necessarily guarantee profits.

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Leonidovich/iStock via Getty Images AppHarvest: Investment Thesis

AppHarvest, Inc. ( APPH ) is a company that grows 40-foot high tomato plants. For me it brings to mind that fairy tale, “Jack and the Beanstalk”. Will they expand into beans as well as berries and leafy greens? This is a “feel good” business that is not difficult to get enthused about. And I truly am enthused about the business and the course it is charting, and I sincerely wish them the very best of success with their endeavors. From a financial and operating perspective, I find performance does not quite match the rhetoric, as explained further below. This does not mean the business operations are not performing well. I could not give the stock a buy rating, even after the large falls in the share price since listing. At the same time, I cannot bring my sentimental self to give a sell rating for a business with such worthy intentions, and quite obvious capability. The SA Premium ratings summary per Fig. 1 below, ranging from Strong Buy to Hold and to Sell, likely reflects the struggle between sentiment and fundamentals for this stock.

Figure 1 SA Premium I am sure there will be many existing shareholders who will be willing to hold and go along for the ride. Just be sure to be able to afford to weather possible further falls in the share price. AppHarvest: Finalist In SXSW Innovation Awards

Readers might not know AppHarvest is a finalist in the New Economy category of the SouthXSouthWest innovation awards , with winners to be announced on March 14. Interestingly, another company promoting closed environment agriculture (“CEA”) is among the finalists, listed in Fig. 2 below. The parent of HydroGreen Vertical Pastures is listed company CubicFarm Systems Corp ( OTCPK:CUBXF ) which produces CEA equipment for indoor vegetable growing. My opinion, despite certain reservations expressed in this article, is AppHarvest is a far superior business to CubicFarm Systems. But I would suggest any reader with an interest in following clean energy developments should subscribe to the newsletter for Star Scientific (unlisted at present), owners of the patented “Hydrogen Energy Release Optimiser, HERO” technology. You probably have not heard of it yet, but in comparison to fuel cells, the catalyst HERO is the equivalent of cold fusion to a standard nuclear reactor.

Figure 2 SouthXSouthWest AppHarvest: ‘Feel Good’ Company

Excerpted from a November 2020 article, “The AgTech Revolution is Underway in Appalachia with AppHarvest” by Jarrett Banks, published on the AppHarvest website , The good news that may surprise some investors: The stock is still cheap. At the SPAC’s closing price of $11.33 Thursday, AppHarvest trades at an implied enterprise value, adjusted for cash, of 2.9 times 2024 sales, according to Sentieo , an AI-enabled research platform. That’s roughly half the multiple of Beyond Meat, which trades at 5.7 times and isn’t growing as fast. And as one of the few B Corp. companies in the public markets, AppHarvest should get an extra boost. Just look at Lemonade, a fintech B Corp. that trades at 7.4 timers 2024 sales – far above peers. But AppHarvest is more than a feel-good ESG – or even profit – story. The company also embodies the private sector leading the country out of one of the worst crises in American history. Maybe a new JD Vance type author will someday write another bildungsroman about the region. Call it Hillbilly Energy. AppHarvest: Technology

Crop Growing Technology –

Slide 1 AppHarvest SEC filing The above slide from presentation per 8-K filing Dec. 15, 2020 , lists the technology used to drive yields from AppHarvest Controlled Environment Agriculture facilities. Robotic Technology –

From company Apr. 8, 2021, announcement of acquisition of Root AI, an artificial intelligence farming startup that creates intelligent robots to help manage high-tech indoor farms. The acquisition of Root AI and its robotic universal harvester, Virgo, is expected to provide AppHarvest with a baseline of harvesting support working […]

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