Is Greenlane Holdings a Solid Long Term Investment?

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When it comes to diversifying a portfolio, one might consider the latest offerings in vaping accessories. Vaping is a trend that has only grown in recent years and is predicted to do so for the foreseeable future. As trends like this start to become mainstream, it can make sense to start looking for investments in the industry. There are many different companies that sell these products but Greenlane Holdings Inc. (GNLN) has some unique edges in the market worth considering. It is perhaps worth exploring how the company will adapt to the current regulation challenges that are facing the vaping industry. It will take industry expertise and foothold to make it through the next couple of years, but holding could be worth the wait. When researching companies like Greenlane Holdings Inc., it is important to look at the most prominent macro trends that are facing the industry. This won’t be too hard given all the news and speculation that has surrounded the legality of vaping in the last year.

Vaping has faced some unique challenges in the last year. Various bans of the product have been a result of legislation that is intended to protect children. The legal status of vaping varies from state to state. However, good companies have been able to navigate through this turmoil by getting a target market and sticking to it. One of the advantages that Greenlane Holdings Inc. has is many different investments in vaping products. Given the targeted nature of the legislation, this could be very important going forward. There have been bans on various flavors that are favorites of teenagers. These include fruity flavors and other tastes like vanilla. The hope is that this legislation can discourage underage smokers from partaking in the product. It will be interesting to see how states continue to use and develop the legislation in this regard. In terms of investments, it means that the company must be adaptable to get your hard-earned dollars.

An Early Mover

Greenlane Holdings Inc. has been around the smoking game since before it was fashionable. The company was founded in 2005 in Boca Raton, Florida and has been the go-to place for many smokers in the industry for over a decade. Upon its IPO in 2019, it was called the first “U.S.-based cannabis company to list on Nasdaq or a major U.S. market” by a company spokesman. Being an early mover into the industry has come with some distinct advantages. The company came soaring out of the gate during its public debut, but has steadily fallen since it entered the public market. Shares were bid up to $19 and then down to around $1.73, where the company sits today. The good news is that this could provide an opportunity to investors, who could possibly pick up the stock at a discount. Weak sales forecast and a negative net revenue have hurt the company, but it does have assets that have not yet been fully utilized. It remains to be seen how the management could possibly reconfigure these assets in order to return the company to profitability.

Market Uncertainty

Another challenge that Greenlane Holdings Inc. is facing is the uncertainty in the marketplace. This is, of course, nothing new to investors but is becoming even more relevant than usual. Macro events like the Corona virus could do much in the way of hurting sales and slowing foot traffic in the stores. Given that this represents a large portion of the company’s possible revenue, it could turn out to be an unpleasant situation for investors. The entire market has been shaken recently and there is no doubt that Greenlane Holdings Inc. will continue to stem the tide wherever possible. But there are several systemic factors that work to their advantage. It is possible that smoking sees in uptick from people who are out of work or otherwise forced to stay at home. If the company can seize on the momentum then they will likely be able to weather the storm.

The recent drop in oil could also affect the company. Oil is used in the manufacturing and delivery process of the company, so the recent oil battle could provide reduced costs if the market slows. It had already been a tough year for the stock prior to this recent downturn, so it remains to be seen how the management will handle the situation. Pairing the legislative and market uncertainty could make the stock a buy. Given the precipitous decline of the stock in recent months, it is possible that the board buys back or combines shares in order to keep its listing. If the price continues to tank under the relevant $1 mark, expect the management to intervene in one way or another. It will be interesting to see what the next year holds for the company.

Conclusion

External factors make the stock risky but could also play to its advantage. The main investing factors should be how much revenue will change based on the relevant macro factors. If you don’t feel comfortable investing now then it could also make sense to wait for a few months and reevaluate what the company is worth. If the stock price returns to its previous high then the return will be quite spectacular for anyone willing to take the risk. The company has a good base and plenty of retail space that will help to drive its valuation. It also has an established brand and connections with vendors all over the world. These factors make the stock a nice watch going forward. It remains to be seen how the company will continue to profit in this economy. But, if it is able to get its sea legs, then watch out. This is a good stock to consider going forward. It should be on your short list in the next several months.


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