Farmers Edge: 5 reasons why you should avoid funding this company
Farmers Edge, a tech start-up aiming to improve the lives of farmers, has taken a dangerous nosedive in the stock market, with prices dropping to $2.63.
The world of capital investments and angel investors is an exciting and dangerous place. To play the game of finance, one needs perseverance, good management, and a little bit of luck.
Unfortunately, Farmers Edge, an ambitious digital company that aims at delivering data-driven technologies to empower modern farmers, has had none of those things.
The company stock prices took a sudden plunge in the past few months amidst rumors of poor investment choices, poor management staff, and bad customer satisfaction.
The question on everyone’s minds now is: is it worth investing in Farmers Edge?
Farmers Edge – a disaster for investors
The short answer – no. Short answers never give you the full picture so let’s elaborate on the subject a little.
Farmers Edge was founded in 2005 in Manitoba, Canada. Initially, it was established as an agricultural platform that helped persons keep track of daily business activities.
With enough buzz and funding behind them, the company transformed into a provider of data-driven technologies that offered expert data analysis to local farmers.
The data was harvested from satellites and could provide important information regarding changing weather patterns and crop health.
The chief demographic the company aimed to exploit were small rural farmers. Satellite imaging data was received from several spacecraft, including Landsat 8 and Sentinel 2.
The company seemed to be doing well in the beginning, with reported Q1 and Q2 positive revenues in 2019 and 2020. However, due to certain turbulence within the company, the current price per share is below $2.63 on the Toronto Stock Exchange.
The stock drop price comes as no surprise. The company has been trending downward with a weekly stock cap at –10%.
Farmers Edge market cap crashed from $791 million in March to $110 million in December. The company has lost over 86% of its overall value in the past 9 months.
Some investors caught wind of this drop and quickly sold off any available stock, while the down spiral blindsided others. A question arose: how can a company with high revenue experience such a rapid decline?
Reason #1 Farmers Edge is bleeding money
Let’s start with the most obvious reason why Farmers Edge is a bad investment idea: the company hasn’t made a decent profit in over a year.
The data available from 2019 and 2020 shows that the company had a sizable stipend from farmer clients; however, more than 50% of those clients did not re-subscribe for the company’s service.
Combine this with the fact that the current stock price is $2.63 and trending down, we don’t see Farmers Edge making a decent comeback anytime soon.
Why did the stock price drop so suddenly? Well, let’s see.
Reason #2 Poor customer reviews
It seems that it wasn’t just stockholders who were unhappy with the company. A simple search engine search for ‘Farmers Edge reviews’ will show you feedback from hundreds of jilted and unhappy customers, on top of several interesting negative reviews from ex-employees.
Reason #3 Poor Top-Level Management
Have you ever heard the phrase “It takes one to know one”? Well, Farmers Edge clearly hasn’t, as it employed several top managers without any managerial experience or expertise in the business.
Wade Barnes, CEO of Farmers Edge, decided to employ friends and his wife at high-level positions within the company. His high school friend Trevor Armitage was appointed as a COO. It’s worth mentioning that he was not qualified to take that position.
Barnes’ wife, Marina Barnes, was appointed CMO. Under her leadership, the company tried to expand towards CIS and US markets within 2009-2013, with little to no success. When that failed, Marina Barnes moved the HQ of the company to Krasnodar, her mother’s hometown, instead of Moscow.
As a result, the company suffered heavy losses in potential revenue due to the low interest of farmers in Krasnodar.
Reason #4 Poor employee retention
If it wasn’t bad enough that the top-level managers of the company had no skill in business, it seems that the higher-ups cared little for the plight of lower managerial positions.
Farmers Edge has a bad reputation for employee retention. The company loses, on average, between 15% and 35% of all employees, especially those in positions of power.
Reason #5 You won’t get your investment back
Putting all facts on the table and calculating the ante shows that Farmers Edge is a sinking ship. Most large investors have run for the emergency boats, leaving behind stragglers and those hoping to double down on their initial investment.
The company management team doesn’t know what they are doing, caring little for their employees and customers. If you wanted to invest a small sum, say a hundred dollars, and hope that stocks would improve enough so you can make a small profit – go ahead.
But if you are a large investor and are tempted to buy stocks while they are low, think again. There are better ways of spending money.
Our opinion – It’s too risky to invest in Farmers Edge
At its current state, investing in the company is a giant risk. Comparing data from the last three years shows that the company is facing a downward spiral, and any investments at its current stage will result in a loss of revenue.
Unless the company is bought out and leadership direction changes, there is little hope for recovery.