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Saturday, November 28, 2020

Acreage Holdings Inc (OTCMKTS:ACRGF) Builds a Base

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Can the higher low hold in shares of Acreage Holdings Inc (OTCMKTS:ACRGF)? We will find out soon enough. Whatever happens, it will come in the context of the company’s announcement that of its recently reported financial results for the quarter ended September 30, 2019.

According to the release, the company just reported third quarter revenue of $22.4 million, a 307% increase compared to the same period in 2018, along with pro forma revenue for the third quarter at $42.2 million, a net loss attributable to Acreage of $39.9 million, an adjusted net loss attributable to Acreage of $15.0 million, and pro forma adjusted EBITDA at a loss of $9.1 million

Acreage Holdings Inc (OTCMKTS:ACRGF) bills itself as a principal investment firm specializing in the cannabis industry.

This is a vertically integrated, multi-state owner of cannabis licenses and assets in U.S. states where either medical and/or adult use of cannabis is legal. With one of the largest geographic footprints of any cannabis companies, it currently owns and/or operates cultivation, processing and dispensary operations. The Company is dedicated to building and scaling operations to create a seamless, consumer-focused branded cannabis experience.

According to public filings, Acreage is the largest multi-state cannabis operator in the United States in terms of number of states with operating licenses, largest total addressable market, and largest serviceable population.  More recently, Acreage announced a transformative acquisition of Form Factory, which will provide the company with the capabilities to become the cannabis industry’s first and only Consumer Packaged Goods company with a national footprint.

Headquartered in New York City, Acreage Holdings is the largest vertically integrated, multi-state owner of cannabis licenses and assets in U.S. states with respect to number of states with operating licenses, according to public filings.

With operating licenses in 19 states, serving a population of more than 172 million Americans, and an estimated 2022 total addressable market of approximately $14 billion in legal cannabis sales according to Arcview Market Research.  Acreage is dedicated to building and scaling operations to create a seamless, consumer-focused branded cannabis experience.

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As noted above, ACRGF just reported financial results for the quarter ended September 30, 2019, including third quarter revenue of $22.4 million, a 307% increase compared to the same period in 2018, along with pro forma revenue for the third quarter at $42.2 million, a net loss attributable to Acreage of $39.9 million, an adjusted net loss attributable to Acreage of $15.0 million, and pro forma adjusted EBITDA at a loss of $9.1 million

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 ACRGF shareholders really want to see. In total, over the past five days, shares of the stock have dropped by roughly -3% on above average trading volume. All in all, not a particularly friendly tape, but one that may ultimately present some new opportunities. What’s more, the stock has benefitted from a jump in recent trading volume to the tune of 98% over the long run average.

Commented Acreage Chairman and CEO Kevin Murphy: “The third quarter was highlighted by tremendous progress of our long-term plan. We launched great cannabis brands that are receiving strong influencer praise, continued building out our wholesale businesses across our national footprint, and achieved 100 percent retail distribution in the fast growing market of Pennsylvania. Importantly, we also have a path to secure the capital resources necessary to fund our future expansion and acquisition activities. The last six months have been challenging for the entire industry, but as I have emphasized since day one, this is a long game and I have never been more optimistic about the future of Acreage.”

Now commanding a market cap of $344M, ACRGF has virtually no cash on the books, which must be weighed relative to virtually no total current liabilities. ACRGF is pulling in trailing 12-month revenues of $63.5M. In addition, the company is seeing major top-line growth, with y/y quarterly revenues growing at 307%. We will update the story again soon as developments transpire. Sign-up for continuing coverage on shares of $ACRGF 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 $ACRGF, either long or short, and we have not been compensated for this article.

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