So far, Wall Street has had a mixed response to cannabis company’s financial results. With many businesses reporting their 2018 Q4 and full year figures, there was much anticipation in seeing just how much growth these companies have seen, especially since these figures would include retail transactions after federal Canadian legalization.
While the anticipation has been strong, reality has somewhat disappointed the markets with many companies reporting growth figures that, while impressive on their own, weren’t good enough to justify the hype. Green Thumb Industries Inc (CNSX: GTII) announced today it’s revenue figures for the year. While the company saw impressive growth, overall losses tripled.
Green Thumb Industries year over year revenue increased by 278 percent to $62.5 million. At the same time, Q4 2018 figures grew by 21 percent in comparison to Q3. GTI also had around $187.3 million in assets and $146 million of cash. In comparison, the company’s outstanding debt of $7.2 million is almost inconsequential, one good sign for investors. However, the company still operated at a net loss of $7.7 million in 2018, with losses in the fourth quarter totaling $3.1 million.
“2018 was a momentous year for GTI. In just six months following our RTO in June and in the beginning of 2019, we have expanded the infrastructure for our consumer products and retail businesses to now include 13 production facilities and the ability to open 88 retail locations across 12 states including pending acquisitions,” said GTI Founder and Chief Executive Officer Ben Kovler. “At the same time, we have built an incredible team that is over 500 strong to support our strategy to distribute brands at scale. With the growth of our branded product distribution, new store openings and adult-use markets coming on line, we are very pleased to have more than tripled our revenues from one year ago both year-over-year and quarter-over-quarter.”
Markets are seeing a similar trend throughout the cannabis industry with companies reporting impressive growth figures at the cost of losses. While choosing this kind of corporate strategy is great for some industries (such as in the case of tech start-ups) investors are beginning to change their tastes, preferring companies that show signs of profitability as opposed to aggressive, nonstop growth.
“Discipline continues to drive how we allocate capital to create long-term shareholder value,” added the CEO. “We continue to execute against our strategic priorities for 2019: 1) establish a leading brand portfolio through innovation, standardization, and distribution; 2) accelerate retail growth through new store openings and consumer loyalty, and 3) bolster infrastructure with people, process, and technology to deliver sustainable profitable growth.”
Overall, the response to this news announcement was mixed, with shares of Green Thumb Industries staying relatively the same throughout the day. Like most cannabis companies, shares of GTI feel drastically throughout Q4 2018 before making a triumphant return in Q1 2019. Green Thumb Industries is one of many smaller cannabis companies that are expected to take off in the coming year, alongside other companies like HEXO corp (TSE: HEXO). With a market cap of only $620 million, the company still has plenty of room to grow in the years to come.
