Splash Beverage Group Inc. (AMEX:SBEV) shares tumbled 12.7% in premarket trading on Tuesday after the company revealed a new joint venture aimed at entering the fast-growing hemp-derived THC beverage market.
The agreement, struck with B.A.A.D Ventures LLC, gives Splash a 51% controlling stake in the newly formed venture, with B.A.A.D retaining the remaining 49%. The partnership will center on Nimbus — a 10 mg hemp-based THC flavored seltzer that has reportedly gained strong early traction in test markets.
The joint venture formalizes more than three months of collaborative work between the two companies, combining Splash’s distribution scale and brand-building capabilities with B.A.A.D’s existing THC beverage operations.
“The THC beverage category is expanding at an extraordinary speed, and this partnership with the team at Nimbus and BAAD puts us meaningfully ahead of the curve,” said William Meissner, President and Chief Marketing Officer at Splash.
The venture plans an immediate rollout of Nimbus into six new states, with a wider expansion to follow in jurisdictions that allow direct-to-consumer shipping of hemp-derived THC beverages. Beyond Nimbus, the partners intend to introduce additional brands across several high-growth segments of the THC drink market.
Despite Splash’s enthusiasm for the new opportunity, the announcement prompted a negative reaction from shareholders, pushing the stock sharply lower ahead of the open.