In this article, we will look at the 7 Worst Vertical Farming and Hydroponic Stocks to Buy.
Vertical farming and hydroponics have proven to be revolutionary solutions in the agriculture sector, addressing food security, sustainability, and urbanization challenges. The global hydroponics market is expected to grow to $25.1 billion by 2027 from $12.1 billion in 2022, as per MarketsandMarkets. On the other hand, the vertical farming industry is forecasted to grow to $50.1 billion by 2032 from $6.92 billion in 2024, according to Fortune Business Insights. Hence, the sector has strong growth potential.
However, despite such positive forecasts, not all companies in the sector are poised for success. Several players are facing a downfall due to rising operational costs, scalability-related issues, and financial instability. These factors make some of the stocks in the sector riskier than others. One of the main factors affecting the industry is the high cost of setting up and maintaining vertical farms. High capital investment is required to support innovations like LED lighting, AI-driven automation, and climate-controlled systems. Although innovations like the CoolGrow VF LED light have enhanced energy efficiency by up to 38%, overall operational costs remain high. Moreover, farm input costs have climbed 44% since 2019, according to AHDB, with fertilizer, electricity, and machinery costs surging between 38% and 50%, decreasing profit margins. Such rising costs put pressure on companies to maintain profitability, especially where the industry struggles with tight margins.
Similarly, dependence on artificial lighting and climate control results in high energy consumption, increasing costs, and reducing profitability. Although technological advancements are being made to decrease costs, energy-intensive operations hit profit margins. Additionally, supply chain disruptions, especially after the COVID-19 pandemic, have added further complications. Labor-related shortages and transportation issues have put pressure on companies, making it difficult to scale operations efficiently. Many vertical farms rely on highly specialized components, and delays in sourcing critical equipment halt expansion efforts.
Furthermore, the hydroponics sector has also been facing regulatory uncertainty. Although cannabis legalization in several markets initially increased demand for hydroponic systems, inconsistent regulations and oversupply in the cannabis market have stunted growth. Many companies in the sector that heavily rely on cannabis cultivation have faced difficulties in pivoting to other revenue streams. On the other hand, although demand for vertical farming produce is increasing, it faces challenges due to higher price points compared to traditional agriculture. While sustainability is an attractive selling point, budget-sensitive consumers tend to go for cheaper options, resulting in a decrease in the market reach of vertically farmed produce.
Investor sentiment is shifting, with increasing doubts regarding capital-intensive agritech ventures. According to McKinsey & Company, annual investments worldwide in food and agribusiness have surpassed the $100 billion mark. However, hydroponic and vertical farming companies are still finding it difficult to secure funding. This has resulted in increased short interest in several underperforming stocks, with hedge funds betting against companies that do not demonstrate sustainable long-term business models. Companies that previously ensured high-margin growth have faced a decrease in revenue, adding to concerns regarding long-term viability.
Ultimately, the structural challenges of the industry, as well as economic pressures, have led to significant stock underperformance for multiple vertical farming and hydroponic companies.
With this, let’s now look into the 7 Worst Vertical Farming and Hydroponic Stocks to Buy.
Photo by onur ozkardes on Unsplash
Methodology
To come up with our list of the 7 Worst Vertical Farming and Hydroponic Stocks to Buy, we started by making use of Finviz screener to identify stocks from the agricultural inputs and farm products industries. We also looked into our previous articles on the sector to make sure relevant companies with substantial market capitalization are included.
Next, we looked into hedge fund interest in these companies, as we believe that stocks with significant institutional backing point toward financial stability. However, we focused on short interest, measured by the short percentage of float, reflecting investor skepticism and potential risks. A higher short interest points toward a company’s frail financial position, operational inefficiencies, or larger industry challenges. The companies were then ranked in ascending order based on their short percentage of float, with the most shorted stocks situated at the top of our list.
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7. iPower Inc. (NASDAQ:IPW)
Short % of Float: 2.01%
Number of Hedge Fund Holders: 2
iPower Inc. (NASDAQ:IPW) provides e-commerce and supply chain solutions and was initially known for hydroponics and vertical farming equipment. The company has expanded its operations through the integration of technology-driven solutions, such as the SuperSweet platform, which enhances supply chain management and merchandising for its partners.
For Q2 2025, iPower Inc. (NASDAQ:IPW) posted a revenue of $19.1 million, a 14% year-over-year increase, primarily driven by SuperSweet and higher product sales. Its gross profit increased by 15% to $8.4 million, while gross margins improved by 44% due to enhanced supplier negotiations. The company managed a net income of $0.2 million, a significant improvement over its net loss of $1.9 million in the previous year. On the other hand, its cash reserves declined to $2.9 million from $7.4 million as of June 30, 2024. This raised liquidity concerns, although iPower Inc. (NASDAQ:IPW) was able to reduce its debt by 31% to $4.4 million.
To strengthen its position, the company is expanding its supplier network to optimize costs and manage supply chain risks. The company recently expanded its manufacturing base to Vietnam, aiming to lower production and logistics costs and improve responsiveness to demand fluctuations. Moreover, SuperSweet continues to perform well, adding 20% to total sales last quarter. It is expected to scale further through AI-driven predictive analysis, improving supplier interactions and merchandising strategies.
Although iPower Inc. (NASDAQ:IPW) is implementing strategic measures to boost operational efficiency, declining cash reserves and dependence on external platforms raise concerns about its long-term potential. The company’s share price dropped by 44.12% year-to-date, adding to concerns over its financial position. Hence, it ranks as one of the worst agriculture stocks.
6. Hydrofarm Holdings Group, Inc. (NASDAQ:HYFM)
Short % of Float: 2.13%
Number of Hedge Fund Holders: 5
Hydrofarm Holdings Group, Inc. (NASDAQ:HYFM) is one of the top suppliers of controlled environmental agriculture (CEA) equipment. It provides solutions for hydroponics and vertical farming, including agricultural lighting, climate control systems, and nutrients. However, due to industry-wide oversupply and lower demand, sales have been impacted. The company is now focusing on expanding its proprietary product mix and diversifying its revenue stream beyond the cannabis sector to try to overcome such challenges.
Hydrofarm Holdings Group, Inc. (NASDAQ:HYFM) reported net sales of $37.3 million for Q4 2024, a 20.9% decrease year-over-year. The company’s margins also squeezed as adjusted gross profit dropped to $3.6 million, accounting for only 9.6% of net sales compared to 24.3% in the previous year. Management associated the negative performance with a lower mix of higher-margin proprietary products and broader industry-related issues. Looking forward, the company forecasts a double-digit decrease in sales in early 2025, with gradual stability expected later in the year.
In order to reestablish profitability, Hydrofarm Holdings Group, Inc. (NASDAQ:HYFM) has put in force aggressive cost-cutting measures. These include optimization of its distribution network and reduction of SG&A expenses. However, the potential increase in tariffs on imports from Canada and China poses an additional risk to margins. The management has also shown interest in strategic alternatives, which include possible asset sales or mergers, highlighting continued financial and operational pressures.
Regardless of efforts to stabilize operations, the company continues to battle decreasing sales and declining profitability. Although its e-commerce business has shown growth, industry conditions are uncertain, making a near-term turnaround uncertain. The company’s shares are down by nearly 75% year-to-date, reflecting its financial position and putting it among the worst agriculture stocks.
5. Agrify Corporation (NASDAQ:AGFY)
Short % of Float: 2.26%
Number of Hedge Fund Holders: N/A
Agrify Corporation (NASDAQ:AGFY) provides software and hardware solutions for the cannabis and hemp industries, offering vertical farming units, cultivation software, and LED grow lights. The company also provides engineers, consulting, and construction services along with alcohol, hydrocarbon, and solventless extraction equipment. Agrify plans to optimize indoor farming and extraction processes by using technology-driven innovations, serving both large-scale and independent operators.
Agrify Corporation (NASDAQ:AGFY) reported a revenue of $1.9 million and a gross profit of $0.2 million for the third quarter that ended September 30, 2024. However, primarily due to a $15 million change in the fair value of warrant liabilities, the company recorded a net loss of $18.6 million. It secured $20 million in convertible note financing to solidify its financial position, with an initial $10 million draw from Green Thumb Industries in early November.
Moreover, Agrify Corporation (NASDAQ:AGFY) has announced leadership transitions, with Ben Kovler taking on the Chairman and Interim CEO positions. Its recent non-binding letter of intent to acquire the Señorita brand of hemp-derived THC beverages demonstrates its shift in focus toward consumer-oriented products. This move reflects the company’s effort to diversify its business, yet the cannabis and hemp sectors remain highly competitive, with regulatory and economic hurdles impacting profitability.
However, the company faces challenging market conditions, with a year-to-date share price reduction of over 45%. Agrify Corporation (NASDAQ:AGFY) ranks among the worst agriculture stocks due to the ongoing financial challenges and shifting business strategies, as uncertainties around profitability and execution risks remain a concern for investors.
4. Village Farms International, Inc. (NASDAQ:VFF)
Short % of Float: 2.46%
Number of Hedge Fund Holders: 7
Village Farms International, Inc. (NASDAQ:VFF) is active across the energy, fresh produce, and cannabis markets and has an established presence in North America and global markets. The company has been broadening its cannabis business, mainly through its fully owned subsidiary, Pure Sunfarms, which has established itself as a leading player in the Canadian market.
Village Farms International, Inc. (NASDAQ:VFF) reported a total revenue of $83 million, indicating an 11% year-over-year growth in Q4, ended December 31, 2024. Full-year revenue witnessed an 18% jump from 2023, reaching $336 million. Fueled by strong organic growth, Canadian cannabis sales increased by 31% year-over-year, while its fresh produce segment also recorded revenue gains.
However, Village Farms International, Inc. (NASDAQ:VFF) witnessed profitability challenges despite achieving strong sales figures. Due to quality control issues, the company took a $10.5 million non-cash write-down on non-flower cannabis inventory in Q4 2024. Its Canadian cannabis business would have achieved an adjusted EBITDA in line with its historical targets without this loss. Meanwhile, to improve operational efficiency, its fresh produce business continued implementing AI-driven cultivation and automation. The company also witnessed surged international cannabis sales, with exports to medical markets increasing 113% year-over-year.
Moreover, Village Farms International, Inc. (NASDAQ:VFF) marked a significant milestone with its expansion into New Zealand. The company disclosed its first cannabis shipment through the country through Pure Sunfarms in 2025. Its top-selling Pink Kush strain, a dominant dried flower product in Canada, will now be available in New Zealand under Medleaf Therapeutics’s Bloom brand. With this move, Village Farms gains a strategic entry into a rapidly growing sector, as the New Zealand cannabis market is expected to grow at a CAGR of 58% by 2030.
However, the company remains vulnerable to risks in the fresh produce segment while making advancements in its cannabis business. Potential tariffs on Canadian and Mexican imports could affect its cost structure, though the company is working on supply chain adjustments to soften the effects. The stock has decreased by over 40% YTD, making Village Farms International, Inc. (NASDAQ:VFF) one of the worst agriculture stocks, as investors’ concerns grow over pricing pressures, regulatory uncertainty, and competitive challenges in the cannabis industry.
3. Edible Garden AG Incorporated (NASDAQ:EDBL)
Short % of Float: 4.10%
Number of Hedge Fund Holders: 4
Edible Garden AG Incorporated (NASDAQ:EDBL) produces organic herbs and salad kits, distributed through major retailers. It operates in the controlled environment agriculture (CEA) sector. The company has encountered financial challenges, as its share price has dropped by over 72% year-to-date despite its sustainability-driven approach.
Edible Garden AG Incorporated (NASDAQ:EDBL) reported a revenue of $2.6 million for the third quarter that ended September 30, 2024, a drop from $3 million in the prior-year period. The company’s decision to phase out lower-margin products was the primary driver of the revenue drop. However, the drop highlights deeper issues as well, such as supply chain inefficiencies and weak demand. Furthermore, the $215,000 revenue delay was caused by Hurricane Helene, which further exposed the company’s vulnerability to external disruptions.
Despite the revenue decline, its gross profit margin increased to 27.1%, primarily due to cost-cutting measures. However, the bottom line remains a concern as it incurred a net loss of $2.1 million. Moreover, the company also encountered significant cash flow risk. Although it secured $5.65 million through an offering, a considerable chunk was immediately used to pay down $3.2 million in debt, which improved its leverage.
On the other hand, Edible Garden AG Incorporated’s (NASDAQ:EDBL) shift toward nutraceuticals and sports nutrition products raises doubts about where it can seamlessly scale in a highly competitive industry. Consequently, Edible Garden AG Incorporated (NASDAQ:EDBL) remains one of the worst agriculture stocks in the market, with an uncertain strategic direction, dropping sales, and financial instability. Although its sustainability initiative may attract niche investors, investor sentiments remain driven by decreasing revenue, liquidity concerns, and persistent operational challenges.
2. GrowGeneration Corp. (NASDAQ:GRWG)
Short % of Float: 5.42%
Number of Hedge Fund Holders: 4
GrowGeneration Corp. (NASDAQ:GRWG) manages one of the largest hydroponic and gardening supply store chains in the United States, primarily catering to the cannabis cultivation industry. The company is undergoing a significant transformation, transitioning from a retail-focused model to a business-to-business (B2B) and proprietary brand-drive approach. This transition, however, has come with major financial and operational hurdles.
GrowGeneration Corp. (NASDAQ:GRWG) faces challenges from decreasing store sales and a restructuring plan that led to 19 store closures in 2024 as it navigates a challenging environment in the hydroponics and gardening sector. The company has been redirecting its focus toward a business-to-business (B2B) model and proprietary brand sales. However, this transition has been accompanied by major near-term financial strain. Inventory write-downs and discounting have majorly led the gross profit margin declining to 16.4% in Q4 ended December 31, 2024, down from 23.5% in the prior year. Although the pace of improvement remains uncertain amid ongoing industry headwinds, management projects the margin to recover by 30% in 2025.
Moreover, GrowGeneration Corp.’s (NASDAQ:GRWG) key strategies involved broadening proprietary brands, such as Chair Coir coco, Ion Lighting, and Drip Hydro nutrients. Sales from these brands contributed 30.4% of Cultivation and Gardening revenue in Q4 2024, a rise from 21.2% a year earlier. However, the company’s shift from retail has affected its overall revenue, which dropped to $37.4 million in Q4. The company’s sales are also struggling with industry-wide demand softness, as store traffic declines and commercial customers shift to e-commerce.
Furthermore, GrowGeneration Corp. (NASDAQ:GRWG) continues to face regulatory uncertainty in the cannabis industry, a core market for its hydroponic business, despite efforts to streamline operations. The company’s forecast for 2025 does not consider the potential federal cannabis policy changes. Nevertheless, the management remains cautious about near-term catalysts.
Thus, the recent transition to an e-commerce and B2B model sparks concerns about the long-term viability of its remaining 31 retail locations, as the management has implied the possibility of further store downsizing if market conditions warrant.
Consequently, investor sentiment remains weak as the company is undergoing structural shifts. As such, GrowGeneration Corp.’s (NASDAQ:GRWG) share price declined by nearly 45% year-to-date, indicating concerns over revenue decline, restructuring costs, and the uncertainty of profitability improvements. This subpar performance places the stock among the worst agriculture stocks for investors seeking stability in the hydroponics sector.
1. The Scotts Miracle-Gro Company (NYSE:SMG)
Short % of Float: 7.52%
Number of Hedge Fund Holders: 33
The Scotts Miracle-Gro Company (NYSE:SMG) is a leading player in the lawn care and hydroponics industry. However, financial challenges and strategic missteps continue to weigh on investor sentiment.
Facing declining sales in its cannabis-focused Hawthorne division, increasing debt, and an aggressive reliance on promotional spending to drive consumer engagement highlight ongoing challenges for the company’s Q1 2025, which ended December 28. Moreover, while total revenue grew slightly to $417 million from $410 million in the same quarter of 2023, a major chunk was contributed by early retailer load-in rather than organic growth. The Hawthorne segment sales dropped by 35% as the company continues exiting low-margin third-party distribution, making it a significant burden. Although the company attempts to improve profitability, the division continues to face uncertainty as management once again considers a spinoff, a plan that previously stalled due to a lack of suitable buyers.
Furthermore, The Scotts Miracle-Gro Company (NYSE:SMG) witnessed its SG&A expenses surge 9%, mainly due to rising advertising and retail activation costs, which now account for nearly 20% of the total sales. At the same time, concerns are raised about whether Scotts can sustain profitability without excessive promotional dependence, while the management views this spending as an investment in growth.
The Scotts Miracle-Gro Company’s (NYSE:SMG) financial stability continues to be a significant concern. The company’s leverage ratio stands at 4.52 times net debt to EBITDA, with substantial debt continuing to burden its balance sheets. While cost-cutting measures, including $75 million in planned supply chain savings, have significantly contributed to improving gross margins by 750 basis points, the gains are counterbalanced by increasing expenses and a slow recovery in core product demand. In addition, attempts to enhance margins through pricing strategies could risk backfiring if consumers push back against higher costs, particularly in a market where discretionary spending remains volatile.
Thus, The Scotts Miracle-Gro Company (NYSE:SMG) encounters significant structural challenges due to Hawthorne segments’ underperformance, a debt-heavy balance sheet, and a business model that is increasingly dependent on costly promotions. As such, due to investor skepticism, it is ranked as one of the worst agriculture stocks to buy, as the stock has plummeted by over 20% on a YTD basis.
Overall, Scotts Miracle-Gro Company (NYSE:SMG) ranks first on our list of the Worst Vertical Farming and Hydroponic Stocks to Buy. While we acknowledge the potential of SMG, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. There is an AI stock that went up since the beginning of 2025, while popular AI stocks lost around 25%. If you are looking for an AI stock that is more promising than SMG but that trades at less than 5 times its earnings, check out our report about this cheapest AI stock.
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