One of the lesser known and perhaps underappreciated plays in the cannabis patch has been Green Thumb Industries Inc (OTCMKTS:GTBIF). The stock has been a powerhouse of consistent strength over the past couple months but has been pulling back a bit over the past week. Shares found some support on Wednesday at the 20-day exponential moving average.
Helping to drive the action, the company just announced that it has entered into an agreement with a syndicate of underwriters led by GMP Securities L.P., pursuant to which the Underwriters will purchase, on a bought deal basis in accordance with the filing of a short form prospectus, an aggregate of 3,250,000 subordinate voting shares of the Company at a price of CAD $20.00 per Offered Security for aggregate gross proceeds of CAD $65 million.
Green Thumb Industries Inc (OTCMKTS:GTBIF) bills itself as a company that manufactures and sells various cannabis products in the United States. The company’s cannabis products include flower, concentrates for dabbing and vaporizing, edibles, and topicals.
The company markets its products through third-party retailers. It also owns and operates a chain of 50 retail stores under the RISE dispensaries name. The company was founded in 2014 and is headquartered in Chicago, Illinois.
According to company materials, “Green Thumb Industries (GTI), a national cannabis cultivator, processor and dispensary operator, is dedicated to providing dignified access to safe and effective cannabis nationwide while giving back to the communities in which they serve. As a vertically integrated company, GTI manufactures and sells a well-rounded suite of branded cannabis products including flower, concentrates, edibles, and topicals. The company also owns and operates a rapidly growing national chain of retail cannabis stores called RISE(TM) dispensaries. Headquartered in Chicago, Illinois, GTI has seven manufacturing facilities and licenses for 50 retail locations across seven highly regulated U.S. markets. Established in 2014, GTI employs more than 350 people and serves hundreds of thousands of patients and customers each year. GTI was named a Best Workplace 2018 by Crain’s Chicago Business.”
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As noted above, GTBIF shares have bounced back into gear after the company announced that it has entered into an agreement with a syndicate of underwriters led by GMP Securities L.P., pursuant to which the Underwriters will purchase, “on a bought deal basis in accordance with the filing of a short form prospectus, an aggregate of 3,250,000 subordinate voting shares of the Company at a price of CAD $20.00 per Offered Security for aggregate gross proceeds of CAD $65 million.”
That has sparked more strength in an already strong technical context. In all, recent action has seen 76% tacked on to share pricing for the name in the past month. Moreover, the name has benefitted from a jump in recent trading volume to the tune of 82% above the average volume levels in play in this stock over the longer term.
This should not be overlooked with a float in play that’s limited — fewer than 18M shares. One is wise to respect the dynamic this may create — a jump in average daily transaction volume in a stock with a restricted float can unleash fireworks as supply is squeezed.
“GTI is capitalizing on market opportunities and executing on its strategic growth plan,” said GTI Founder & Chief Executive Officer Ben Kovler. “We are excited about this equity offering and appreciate the support of our investors. GTI will continue to take a highly disciplined approach to capital allocation and financial management to create value for its shareholders.”
At this time, carrying a capital value in the market of $326M, GTBIF has about $112.6M in cash on the books, which must be weighed relative to about $9.3M in total current liabilities. The company recently reported $24.5M in trailing 6-month revs on major topline growth of about 250% on a quarterly y/y basis. We will update the story again soon as developments transpire. Sign-up for continuing coverage on shares of $GTBIF stock, as well as other hot stock picks, get our free newsletter today and get our next breakout pick!
Disclosure: we hold no position in $GTBIF, either long or short, and we have not been compensated for this article.