2020 has been a tricky year for most marijuana stocks. A majority of companies, that deal with marijuana, have suffered losses due to a lack of profitability in this sector. Additionally, the decline in cannabis stock has made investors shy off from purchasing. However, despite the decrease in the value of pot stocks, Curaleaf stock has been performing exceptionally well in recent months. Curaleaf Holdings is an American pot company based in Wakefield. According to Curaleaf stock has increased in value by 26% in the past ninety days.
The impressive turnaround of this stock has caused a stir in the financial market as investors now contemplate buying its stocks. Unlike other pot stocks, Curaleaf has generated impressive returns since the beginning of the year. As of now, each share of this company costs $6.25. Moreover, this stock is trading at seventeen times more than its sales. For a company that started out in 2010, Curaleaf's stocks are performing substantially well. The stock return is also quite remarkable. Despite the impressive returns, investors are still unsure if Curaleaf stock is a substantial long-term investment. This is because, in the previous years, the stocks have potrayed an up and down trend. Hence, there are concerns that it's current perfomace may not last.
1. High revenue growth in the company
In 2019 Curaleaf announced its revenue in the third quarter. The company had a massive increment in income by a whopping 189%. Its revenue was up from $21.4 million to $61.8 million. The enormous increase in revenue was due to the expansion of the company into the Florida and New York markets.
Additionally, Curaleaf had acquired other pot companies in Maryland and Arizona. These acquisitions generated a lot of revenue as the company opened up more dispensaries to cater to its clients. The company also opened many dispensaries and production facilities in the state of Massachusetts, which is a lucrative market for pot companies, as the state has a vast number of recreational users of cannabis. As per Wikipedia 10% of the population in this state, over twelve years old, had used pot. As a result, Curaleaf Holdings has doubled its operating facilities to cater to its new customers. Currently, this company is involved in growing, processing, and distribution of pot in more than twelve states in America. This company also deals in marijuana products which include: pre-rolls, dry herb vaporizer, concentrates, tinctures, and edibles. The company has a network that consists of fifty dispensaries, thirteen pot processing sites, and twelve cultivations sites.
2. Capital Injection
According to Global Report Curaleaf Holdings secured a $275 million loan grant. The money was to be used to settle previous debts and pay for operational expenses that the company incurred during its past acquisitions - The company had earlier been involved in the purchase of Glendale.
Additionally, the money was also to be used to expand into other markets so as to massively increase the company's revenue. The CEO of this company, Joseph Lusardi, said that the loan had been secured without the company diluting its shareholders' stock. As a result, the company's balance sheet was excellent. The loan also allowed the company to engage in other strategic ventures. This move would see Curaleaf seek new markets to generate more revenue. These strategic ventures and expansion moves are all part of Curaleaf's long term objectives.
As of now, Curaleaf has acquired Acres Cannabis, an award-winning dispensary in Las Vegas. This dispensary is popular as it was a pioneer dispensary in Las Vegas. This acquisition meant that Curaleaf Holdings also gained two operation facilities and two cultivation sites that were previously owned by Acres Cannabis. It was also to operate the two dispensaries that were under Acres Cannabis.
In addition, the company is set to expand into the cannabis markets in Illinois. The state just approved the recreational use of marijuana in the past months. Besides this expansion, this company is on the verge of acquiring Grassroots, a Chicago-based pot company. With this acquisition, Curaleaf will add eight more dispensaries to its name and will be able to operate in nineteen states. This move will further generate more revenue for this company.
Curaleaf also is planning to move into the California market. It is in advanced talks and is almost finalizing its acquisition of Select. With this acquisition, Curaleaf will be the largest pot company in America based on its market cap and revenue income. The company will also significantly save on costs. For instance, it’s input cost will reduce by half while the processing costs will reduce by a quarter. This will in turn significantly improve the revenue following the massive reduction of its operating costs.
What the Future Holds for Curaleaf Stock
According to Investing Daily, public spending on legal cannabis will hit $22.8 billion by 2020. Also, the recreational use of cannabis will account for 67% of this expenditure. Thus, Curaleaf's massive expansion seeks to take advantage of the anticipated explosion in marijuana use. Moreover, Curaleaf Holdings is the largest retail chain of pot products that are publicly traded. This company had the most extensive Initial Public Offering in America and it is currently valued at $4 billion. The future seems bright for Curaleaf stock.
Even though Curaleaf stocks took a massive hit in 2019, they recovered and are currently performing extremely well compared to other pot stocks. The company is also massively expanding into new markets such as Florida and Las Vegas. These expansions will significantly increase Curaleaf's revenue base. Additionally, this company is in the process of acquiring other pot businesses. With its sights in California, you can expect Curaleaf's revenue to double in the coming years and its pot stocks to keep appreciating. So, if you are searching for a stock with tremendous long-term potential, Curaleaf stock might be your best option.
Written by Bill Vix
Read more posts by Bill Vix