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Sunday, October 25, 2020

Terra Tech Corp (OTCMKTS:TRTC) Battles with the Market

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Terra Tech Corp (OTCMKTS:TRTC) has been a clear underperformer in the aftermath of the November 8 vote that has been such a powerful catalyst for the marijuana space. As we have said countless times, the market is an information processor. And when a huge sector-wide catalyst comes along, there is always a dance that takes place with several features.

The first step is the general anticipatory move. In this case, that means that anything and everything to do with marijuana rallied into the vote. The second step is a limbo period of reactive trading. This is more or less a violent back and forth as late reaction money comes in on the good news and anticipation money banks overleveraged positions without regard for fundamental quality. It’s an interference pattern for a wave form, for any physicists in the audience. The third step is a systematic filtering, during which the wheat is separated from the chaff. TRTC is starting to act a bit “chaffy”, but it’s important to realize that this step is often where value is created as well. So we need to take a deeper look.

Terra Tech Corp (OTCMKTS:TRTC) trumpets itself as a company that engages in the design, marketing, and sale of hydroponic equipment with proprietary technology to create sustainable solutions for the cultivation of indoor agriculture in Newport Beach and Irvine, California.

It operates through two segments, Hydroponic Produce and Cannabis Products. The company offers environmental controllers and timers; ballasts; bulbs; reflectors; nutrients; and portable hydroponic trailers and The Big Bud and Little Bud, which are custom fabricated proprietary cultivation systems for horticulture enthusiasts, local urban farmers, and greenhouse growers.

Terra Tech Corp also operates as a retail seller of hydroponic produce, herbs, and floral products, which are distributed in the Midwest and the Northeast United States; and produces and sells a line of cannabis flowers and cigarettes, as well as a line of cannabis pure concentrates, including oils, waxes, shatters, and clears to dispensaries in California.

TRTC operates through multiple subsidiary businesses, including Blum, IVXX Inc., Edible Gardens, MediFarm LLC and GrowOp Technology.

Blum’s retail medical cannabis facilities focus on providing the highest quality medical cannabis to patients who are looking for alternative treatments for their chronic medical conditions. Blum offers a broad selection of medical cannabis products including; flowers, concentrates and edibles through its Oakland, CA and multiple Nevada locations.

IVXX, Inc. is a wholly-owned subsidiary of Terra Tech that produces medical cannabis-extracted products for regulated medical cannabis dispensaries throughout California. The Company’s wholly-owned subsidiary, Edible Garden, cultivates a premier brand of local and sustainably grown hydroponic produce, sold through major grocery stores such as ShopRite, Walmart, Winn-Dixie, Raley’s, Meijer, Krogers, and others throughout New Jersey, New York, Delaware, Maryland, Connecticut, Pennsylvania and the Midwest.

Terra Tech’s MediFarm LLC subsidiaries are focused on medical cannabis cultivation and permitting businesses throughout Nevada. The Company’s wholly-owned subsidiary GrowOp Technology specializes in controlled environment agricultural technologies.

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Terra Tech Corp released financial results on November 9. And while the results can easily be spun as a strong quarter, the market took them very badly. The stock is down about 40% during the digestion of that report. However, it’s important to remember that the market for these shares was coming off a speculative frenzy in anticipation of the November 8 vote. And the stock was up over 300% for the year to date into that report.

In terms of bare numbers, TRTC is making serious money at this point, with trailing 12-month revs coming in at $20.37M. In addition, the company is starting to see major topline growth, with quarterly y/y revs increasing at 244%. That said, many investors feel the company failed to live up to the guidance provided by Derek Peterson during prior calls, making $7 million in sales for the quarter feel like “an insult”, particularly with a seemingly surprising dent in margins.

Just this week, the company looks to have made a change with its accountancy as a board approved event unrelated to any prior issues. We don’t like to jump to conclusions, so we will refrain from speculation on this issue.

At this time, carrying a capital value in the market of $138.2M, TRTC has a significant war chest ($3.40M) of cash on the books, in a pool of total assets a bit less than $70M, which stands against an appreciable load ($2.79M) of total accumulated debt.

Where this company actually fits into the grand puzzle of the booming cannabis patch is uncertain at present. But we should remember, those who bought in on January 1, 2016 are still extremely happy with how the year has gone. Those looking for a quick new doubling or tripling perhaps need to be realistic and note the dilution factor that has been at play. This is no lightweight. We will check up on this one again very soon. For continuing coverage on shares of $TRTC stock, as well as our other hot stock picks, sign up for our free newsletter today and get our next hot stock pick!

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