You’re reading a copy of this week’s edition of the New Cannabis Ventures weekly newsletter, which we have been publishing since October 2015.
During October, GTI dropped 26.3%, while its closest peers averaged a decline of 10.7%.
Looking at the 9 leading MSOs by revenue, a group that includes Ascend Wellness, Ayr Wellness, Columbia Care, Cresco Labs, Curaleaf, GTI, TerrAscend, Trulieve and Verano Holdings, GTI still trades at the top of the group on two metrics, enterprise value to sales and enterprise value to adjusted EBITDA.
As investors begin to look at 2022, though, they may be questioning the amount of this premium, as the projected growth for revenue ranks 9th in the peer group at a still very healthy 33% .
We also think it’s important for investors to remember that the American cannabis industry isn’t likely to evolve into a winner-take-all competition as long as there is no interstate commerce.
Perhaps where it has stood out the most among peers has been its ability to raise both debt and equity capital from institutional investors.
As it relates to next year, the slowing overall industry sales could impact the outlook, but a bigger factor, in our view, is the delay in New Jersey, which had been expected to launch its adult-use program in 2021 but still hasn’t done so.
We think that the massive expansion in revenue and profitability, the additional states that have legalized and that are in the process of implementation and the vastly improved access to capital more than justify the modest share price appreciation in American cannabis stocks over the past 22 months.
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