Why the Cresco Labs Inc (OTCMKTS:CRLBF) Pullback May be Near Bottom

Why the Cresco Labs Inc (OTCMKTS:CRLBF) Pullback May be Near Bottom


The pullback in shares of Cresco Labs Inc (OTCMKTS:CRLBF) continues in recent action, moving under the key 50-day moving average to test the underside of the big round $10/share number. That could represent a key zone that brings in some fresh support. To make matters more interesting, the company just provided an update on its acquisition of CannaRoyalty Corp. d/b/a Origin House.

According to the release, “Under the United States Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, Cresco Labs is required to file a notification to U.S. antitrust authorities and observe a waiting period before completing the Transaction. On June 10, 2019, pursuant to the HSR Act, the Company received a request for additional information from the United States Department of Justice Antitrust Division. The Second Request extends the HSR Act waiting period for up to 30 days after Cresco Labs and Origin House have each substantially complied with the Second Request, unless that period is extended voluntarily by the parties or terminated sooner by the Department of Justice.”

CRESCO LABS ORD (OTCMKTS:CRLBF) trumpets itself as a company that manufactures and sells medical cannabis products in the United States. It offers cannabis dry flower; vaporizer forms of cannabis; cannabis oil in capsule, oral and sublingual solutions; cannabis in topical; and other cannabis products.

The company also provides cannabis infused edibles, including chocolate and toffee confections, fruit-forward gummies, and hard sweet and chews. Cresco Labs Inc. sells its products under the Cresco brand.

In addition, it operators a Hope Heal Health dispensary in Fall River, Bristol County, Massachusetts.

The company was formerly known as Cresco Labs, LLC and changed its name to Cresco Labs Inc. in November 2018. Cresco Labs Inc. is headquartered in Chicago, Illinois.

According to the release, “Cresco Labs, based in Chicago, is a leading U.S. cannabis company with experienced management, access to capital and a demonstrated growth strategy. As a differentiated grower, processor and retailer of premium cannabis operating in ten states, the company focuses on entering highly regulated markets with outsized demand potential and high barriers to entry. Its impressive speed-to-market gives Cresco a distinct competitive advantage as it replicates its model to expand its national footprint. Cresco’s proven ability to execute is complemented by a cutting-edge brand strategy spearheaded by several of the brightest minds in consumer marketing in the nation. Cresco’s products are tailored to all major consumer segments: everyday cannabis, medicinally focused, connoisseur grade, and chef inspired edibles by James Beard Award-winning pastry chef Mindy Segal. Learn more about Cresco Labs at crescolabs.com.”

Find out when $CRLBF reaches critical levels. Subscribe to OracleDispatch.com Right Now by entering your Email in the box below.

As noted above, CRLBF just provided an update on its acquisition of Origin House.

While this is a clear factor, it has been incorporated into a trading tape characterized by a pretty dominant offer, which hasn’t been the type of action CRLBF shareholders really want to see. In total, over the past five days, shares of the stock have dropped by roughly -7% on above average trading volume. All in all, not a particularly friendly tape, but one that may ultimately present some new opportunities. Over the past month, shares of the stock have suffered from clear selling pressure, dropping by roughly -11%.

Moreover, the stock has witnessed a pop in interest, as transaction volume levels have recently pushed 12% above its longer-run average levels. This is particularly important due to the tiny float size in the stock (of 22 million shares).

“Consistent with other pending transactions in the cannabis industry, we have received a request for additional information from the Department of Justice regarding our acquisition of Origin House,” said Cresco Labs CEO and Co-founder Charlie Bachtell. “We are confident that we will be able to submit all requested documentation to the Department of Justice as soon as possible and continue toward closing of the transaction. As announced today, Origin House’s shareholders overwhelmingly approved the acquisition. We look forward to combining our two companies and delivering on the significant opportunities we have to create shareholder value in the coming years.”

Earning a current market cap value of $431M, CRLBF has a significant war chest ($151.5M) of cash on the books, which must be weighed relative to about $49.5M in total current liabilities. One should also note that debt has been growing over recent quarters. CRLBF is pulling in trailing 12-month revenues of $28M. However, the company is seeing flat action on the top-line on a sequential quarterly basis as of its latest reporting period. We will update the story again soon as further details emerge. Sign-up for continuing coverage on shares of $CRLBF 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 $CRLBF, either long or short, and we have not been compensated for this article.

Sign Up for our 100% FREE Oracle Dispatch Newsletter