You’re reading this week’s edition of the New Cannabis Ventures weekly newsletter, which we have been publishing since October 2015. The newsletter includes unique insight to help our readers stay ahead of the curve as well as links to the week’s most important news. We post this and all of the newsletters on our website here.
Friends,
This week was a rough one for MSOs, though we are not at all surprised. There were several Q4 reports from large MSOs late in February, but this week only a single large MSO reported. Curaleaf’s revenue and adjusted EBITDA for Q4 were ahead of expectations, but the stock fell sharply. The stock fell 13% during the week and is up now 4% so far in 2024.
I sent a preview of the Curaleaf Q4 report to subscribers of 420 Investor warning them about the stock’s valuation and that the 2025 analyst estimates seem too high. Despite higher revenue and adjusted EBITDA, analysts reduced their outlooks for 2025, with adjusted EBITDA now projected to be $419 million, down from $456 million ahead of the report. The tangible book value of Curaleaf is -$748.4 million, and the current ratio (assets divided by liabilities due within a year) was only .85X. Net debt is $496 million, due primarily in 2026.
Green Thumb Industries is another MSO that had a better-than-expected financial report but fell, and it fell more this week. AdvisorShares Pure US Cannabis ETF (NYSE Arca: MSOS), which has over 45% in Curaleaf and GTI, is still up year-to-date, but it has dropped substantially. The ETF has no index, but the New Cannabis Ventures American Cannabis Operator Index has 14 stocks, all of which it holds, and it is down a lot from its recent peak:
We warned last week that the price action in the MSOs is a red flag, and the reaction to the Curaleaf report reinforces this idea. We are hopeful that cannabis stocks will do better, but we realize that they may not. We have shared our negative views on a couple of Canadian LPs, Canopy Growth and Tilray, and both are down a lot in 2024. Curaleaf appears to be overvalued relative to peers.
New Cannabis Ventures publishes curated articles as well as exclusive news. Here is some of the most interesting business content from this week:
Exclusive Articles
Cannabis Markets See Sales Plunge
Capital Raising
Financial Reports
Curaleaf Q4 Revenue Grows 4% Sequentially
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Sincerely,
Alan
