multistate operators , one of the leading producers of indoor-grown cannabis and products made from it, posted double-digit revenue growth in its most recent quarter, alongside significant market share gains this year — yet its shares have steadily sunk since February.
This number is good enough to place it fourth among Canadian LPs, while competitors Tilray and Aurora Cannabis have been losing market share, going from 20% to 14%, and 8% to 4% respectively.
In its Q3 earnings from July, the company posted $29 million in revenue, up 51% over the previous quarter and 31% over the year-ago period.
But its SG&A expenses have risen by 32% year over year for the quarter, partly due to increased staffing and office costs related establishing its Centre of Excellence in collaboration with British American Tobacco, which purchased a 20% stake in Organigram back in March.
The rest was likely placed into inventory or destroyed, resulting in writing off of costs related to inventory or destruction of product, and missing out on potential sales.
Organigram CEO Beena Goldenberg attributes the company’s growing market share to the high quality of products the company offers, stating, “The strong demand for our products speaks to the fact that consumers are responding favorably to the great brands, products, and innovations that we continue to deliver on a regular basis.” This would seem to go hand in hand with better-controlled inventories as well.
Although the bottom line still came to a loss in the July report, it shrank by 96% year over year, from $90 million in last year’s quarter to $4 million this time around.
Growing revenue, narrower losses, and increased market share will go a long way toward reversing the opinion of investors on a company’s stock that has been tanking.
If they’re right, Organigram’s continued focus on quality could lead it to greater market-share gains.
Congresswoman Nancy Mace of South Carolina is circulating her state’s Reform Act as a basis for legalizing and taxing cannabis at a federal level, a move that Cantor Fitzgerald analyst Pablo Zuanic believes “significantly increases the probability of federal level marijuana reform” within the next few years.
For those willing to take a shot with a bit of risk, which would not be considered extreme by many for investing in cannabis, now is a good time to buy low.