Thus they have to pay taxes on gross profit, which inflates their tax burdens to as high as 80%. Taxation also reduces earnings and because cannabis is still federally illegal and as a schedule 1 substance, cannabis companies such as GTBIF are not allowed to deduct business expenses from their taxes. With high fixed asset investment, earnings are reduced as depreciation & amortization (D&A) rise. As it so happens, the cannabis industry features both. While earnings are the best proxy for profit generation, earnings have a few key issues that are especially salient in industries with extensive investment needs and/or high taxation. To look at this question, one should analyze 2 key operating metrics: Earnings per share (EPS) & operating cash flow per share (OCF/share). Thus, the question to ask is has Green Thumb’s revenue growth been value destructive? But revenue growth without profitability is value destructive as spending 2$ to get back 1$ is not beneficial to shareholders. GTBIF Operating History (GTBIF June 2023 Investor Presentation) Growth & Operating HistoryĪs mentioned previously, GTBIF’s revenue growth since its IPO has been truly astounding. Is there opportunity here or is GTBIF doomed for continued stagnation? While the cumulative return has been low, the stock price has been incredibly volatile reaching a low of around $4.50 per share during the COVID crash and a peak of around $37 in February 2021 when exuberance about regulatory reform was at its peak. Meanwhile its stock price is currently at $8.35 for a CAGR of just 1.11% 5 years after it has gone public. Through a history of acquisition and organic growth, GTBIF has increased revenue almost 20x from $62 million in 2018 to over $1 billion today. GTBIF is vertically integrated with its own grow facilities, distribution, retail channels, and brands. By the end of 2018 GTBIF had about $62 million in revenue.įast forward to today and GTBIF has 80 retail stores and 18 manufacturing facilities spread across 15 states. At that time GTBIF had 12 retail stores and 7 manufacturing facilities spread across 6 states. GTBIF went public through a reverse merger with Bayswater Uranium Corporation (a shell company) in 2018 at a price of $7.90 per share. Ben Kovler retains significant ownership with a 7.8% stake in the company. While Kadens has since left the company, GTBIF has been able to grow massively since its humble beginnings. Background & HistoryĮstablished in 2014, Green thumb industries began as a small cannabis company in Illinois headed by current CEO Ben Kovler and former CEO Peter Kadens. Key risks include continued regulatory headwinds and price compression in cannabis prices. Additionally, 2 major catalysts can serve as value unlocks and serve to rerate the multiple on GTBIF’s stock, which is near all-time-lows. They have the best balance sheet among the MSOs with significant growth potential in states that have recently legalized recreational cannabis. Green Thumb Industries ( OTCQX:GTBIF) is one of the largest US multi-state operators (MSO) in the cannabis industry.
0 kommentar(er)
