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Saturday, October 31, 2020

Growlife Inc (OTCMKTS:PHOT) Nov 8th Looms Large

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Growlife Inc (OTCMKTS:PHOT) is a low-priced trading equity that has grabbed hold of the attention of traders during the stock’s recent rally attempt. The catalyst is of course the legal cannabis footprint expansion due on November 8 as nine states head to the ballot boxes to determine the legislative reality of marijuana in those states.

One clear point to make about this particular stock is its failure to embrace the Green Rush 2.0 spirit with gusto. PHOT is what you might call a “worrisome laggard”. To the extent the market is smart – and according to legions of scholars, it’s pretty good with situations like this – the herd is being picked apart by retail investors, hedge funds, and investors of all sorts in a process that is separating the wheat from the chaff. And PHOT is starting to look gluten-free, if you get my meaning.

Growlife Inc (OTCBB:PHOT) trumpets itself as the next in line as the nation’s largest cultivation service provider for cultivating organics, herbs and greens and plant-based medicines.

Their stated mission is to “best serve more cultivators in the design, build-out and expansion of their facilities with products of high quality, exceptional value and competitive price. Through a nationwide network of local representative, regional centers and its e-Commerce team, GrowLife provides essential goods and services including media (farming soil), industry-leading hydroponics equipment, plant nutrients, and thousands more products to specialty grow operations in 17 states.”

GrowLife is headquartered in Seattle, WA and was founded in 2012.

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Traders will note 88% piled on for shareholders of the company during the trailing month, but this action is running counter to the larger trend in the name. Market participants may want to pay attention to this stock. PHOT has evidenced sudden upward volatility on many prior occasions. What’s more, the listing has seen interest climb, with an increase in recent trading volume of exceeding 200% over what the stock has registered over the longer term.

However, there is very little information out there on this stock, and OTCmarkets.com notes that it is not being handled with any kind of market making facility. Pricing is unsolicited, and therefore, may not be easy at all to trade, in terms of mechanics.

According to the SEC, “When you see the word “unsolicited” as part of a stock quotation page on a website such as the Pink Sheets (marked as “unsolicited”) or OTC Bulletin Board (marked as “U”), you should be aware that the quote is not necessarily a market maker’s own quotation reflecting a price based on market conditions or current information about the company being quoted.  Instead, it is a quotation that a market maker posts to reflect an unsolicited order by a customer. So, if you and anyone calls his or her broker, or places an on-line order for the stock – without the broker’s promotion of the stock to that individual – that order would be posted at the customer’s own designated price and marked as an “unsolicited” quotation.”

In June PHOT announced GrowLife Cube, a new subscription service for emerging indoor growers. GrowLife will service the demand from aspirational indoor cultivators in many states, from first-time growers to those entrepreneurs seeking to scale-up and become professional cultivators. And therein lies all potential here.

GrowLife Cube, found at Greners.com, is a complete indoor growing subscription service that provides an ecologically friendly environment with indoor growing equipment packages starting at $499 and monthly supplies and consulting services to help bring crops to harvest.

At this time, carrying a capital value in the market of $20.8M, PHOT has virtually no cash on the books and nearly $7M in liabilities, making for a very poor balance sheet situation. We would also note that the Company’s CEO recently converted 4m shares into ownership at a strike price of a penny, meaning that every penny higher, he has the chance to sell for $40k in pure capital gains. This is an additional overhang, but is not that worrisome considering the stock’s liquidity at present into November 8, with volume averaging over 20m shares per day. That said, given the lack of market making, it may be very dangerous after that point. For continuing coverage $PHOT stock, and our other hot stock picks, sign up for our free newsletter now and get our next hot stock pick!

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