MW Green Thumb Industries looks past 'tricky time' for cannabis stocks as the company notches another profit
By Steve Gelsi
Green Thumb's Ben Kovler says the sector's big drop this week isn't causing the Chicago-based company to change course
The chief executive of one of the U.S.'s largest legal cannabis companies said the big hit to cannabis stock this week isn't causing him to rethink the direction of his profit-generating company.
Green Thumb Industries Inc. Chief Executive Ben Kovler said recent days have marked a "tricky time with the industry taking a major step back in terms of valuations" on the heels of election day.
The cannabis sector plunged after voters in Florida rejected a referendum in Florida and Kamala Harris - who voiced support for changes in federal laws for cannabis - lost to Donald Trump for the U.S. presidency.
Also read: Cannabis stocks crater as Florida fails to garner needed votes for adult use
Green Thumb's stock (GTBIF) is down 12% this week including a 4% drop on Friday. Cresco Labs Inc. (CRLBF) has lost 13% this week and Trulieve Cannabis Corp. (TCNNF) has fallen by 34%, while the AdvisorShares Pure U.S. Cannabis ETF MSOS has fallen about 23%.
Despite these developments, Kovler said he's been running Green Thumb under the assumption of no major move on the federal level for legalization.
"There's really no change around here," Kovler told analysts on its third-quarter conference call late Thursday. "We don't really care about the short-term voting."
Kovler still sees the legal U.S. cannabis market at least doubling from roughly $31 billion now.
One growth driver for the company is its pact with Magnolia Bakery, a cupcake and dessert chain now offering products containing THC to customers 21 and over that are derived from hemp, which remains legal nationally.
For the third quarter, Green Thumb missed analyst estimates for earnings but beat on revenue.
The company's net income for the three months ended Sept. 30 fell to $8.62 million, or 4 cents a share, from $20.7 million, or 9 cents a share in the year-ago period. Analysts surveyed by FactSet had estimated net income of 6 cents a share.
Green Thumb's revenue rose 4% to $287 million, ahead of the analyst estimate of $282.9 million.
Canopy Growth trims loss but misses analyst estimates
Canopy Growth Corp.'s stock $(CGC.AU)$ fell 5.8% after the Canadian cannabis company missed FactSet consensus estimates for its second-quarter loss and revenue.
Canopy Growth's said it lost C$128.3 million ($92.3 million) or C$1.48 a share, compared to a loss of C$310 million, or C$4.33 a share, in the year-ago period.
Analysts surveyed by FactSet expected Canopy Growth to lose 50 cents a share in Canadian currency.
Canopy Growth's second-quarter revenue fell 9% to $C63 million, just short of the analyst estimate of C$64 million.
Bernstein analyst Nadine Sarwat reiterated a market-perform rating on Canopy Growth and said the company would have likely beaten revenue estimates if not for a supply disruption for Wana Brands, its cannabis edibles business.
The company did report better-than-expected performance in Canadian medical cannabis and its Storz & Bickel vaporizer unit. It also managed to beat its gross margin estimate by 2.7% which Sarwat said "was the most welcome surprise."
Including Friday's move, Canopy Growth's stock has fallen 17.6% so far this year, while the Amplify Alternative Harvest ETFMJ has dropped 14.9%.
-Steve Gelsi
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November 08, 2024 11:28 ET (16:28 GMT)
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