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The chart has given false signal after false signal because CLVR is a play toy for the hedge funds, shorts and algos. They game this thing as they see fit. Minimal retail interest or knowledge of this company not to mention the sector being in the toilet with abysmal liquidity flow outside of the aforementioned opportunistic sharks. If the long shot SAFE bill somehow gains real traction that could light a fuse under CLVR but Schumer’s bill is already assumed dead. CLVR doesn’t make a dime, in fact they’ll have burned well over $100M well before they hope to see a profit, which is why it trades at a $45M market cap.
https://www.viridianca.com/chart1
“Full federal legalization is still years away at best”
The confirmation of first commercial sales into Israel is very good news but frankly it’s short on details so the market yawned. I’d guess this is not a substantive first sale but hopefully it’s the beginning of a whole lot more. Partnering with Intercure was a huge coup for CLVR.
Yes agreed. $2M a quarter or hopefully an $8M + annual run rate exiting 22 for the licensees is nothing to sneeze at. And as these revenues grow this will improve the margin profile. And my guess is George will most certainly want to enter the NY market in 2023.
As I’d suggested recently, the tailwinds are mounting for Lowell and these low .20s were gift shares.
The market has this one on ignore for now, which provided an opportunity to get long with some cheapies recently in the .26 - .28 range.
The phosphate tolling plant expansion is the low hanging fruit revenue growth opportunity offering strong margins while they continue to refine their SCM solutions and provide further details on commercial ramp up and production.
Strong insider support. Share structure is a little high at 140 M f/d but hopefully they’re able to self fund expansion plans with accelerated warrant exercises and strong revenue growth especially with DAP and MAP still near record highs due to China’s curbed exports and record high nat gas prices in the EU closing fertilizer production capacity.
DD, that’s really the million dollar question in my mind. Just where do potash prices land if/when we see a significant correction? At $450 US a ton, Verde should still do quite well since production costs for both plant 2 and 3 (once scaled up) will offer exceptional gross margins. I also think bio revolution could see significant demand and that product could juice margins as well to help mitigate a possible halving of MOP. The concern is obviously that just as NTR and MOS expand their production capacity, Belarus sanctions are lifted or they figure a way to regain their exports back to pre-sanction levels and we again see 2019 MOP spot prices, decimating the profit margins.
The licensee model is a mixed bag. While it’s great in terms of expansion and deepening of brand awareness and reputation my understanding is Lowell only collects revenue of 15% wholesale. So despite licensee sales being impressive, little of this lands in Lowell’s coffers. The upside to the licensee model is virtually no costs to Lowell and with 3 more states coming online, the revenue run is certainly going to get better.
1) Recent quarterly cash burn was around $2.1M (down $7.9 to $5.8 sequentially). This was a huge improvement over the prior quarter.
2) The cult tax will impact Q3 forward as it went into effect July 1. It should be about $1.5M in quarterly tax savings ($160 per lb X 38K lbs).
3) The 15% excise tax is shifting from distributors to retail point of sale but this is just a change of who collects the tax, so no additional windfall for Lowell with this change.
4) Yes, the key for Lowell is scale, velocity and margins. Right now, they have the scale. Next they need to funnel formerly wholesale product into the retail cpg segment, enter the Lowell 35’s and I imagine their kid brother House weed prerolls. With the automated equipment on hand, it’s clear George envisions high velocity for Lowell’s prerolls. Margins are excellent for the 35’s.
Germany isn’t legalizing until 2023 at the earliest.
The US is deadlocked with no end to decriminalization in sight. Dems have a few more months left before handing back Congress to the repubs but it’s very clear Schumer is not the guy who will get anything done.
Flower exports are the key. They have to prove they can grow high grade desirable cannabis for the medical market. They failed miserably at this in 2021 and they need to climb the learning curve fast this year and prove they can compete. If not, this is dead money just hoping on a cheap buyout.
What catalyst are you looking for?
Finished building my position. I view these prices as absolute gift shares similar to the ones I picked up when George came in to recap Indus over two years ago.
In terms of Cali:
The cultivation tax is out as of July 1.
Excise remains unchanged at 15%.
Retail dispensary license growth is finally gaining steam. 150 new licenses issued state wide since February.
Wholesale glut is still an issue - all the more reason for Lowell to funnel as much of their product through a growing retail channel.
Listening to George’s last 2 presentations it’s clear he is Lowell’s brand ambassador; he’s talking about an industrial scale pre-roll platform here, while completely unafraid to share his entire playbook with investors and competitors alike, which speaks to a level of immense confidence in their platform and this marquee product.
Lowell 35’s (rolling out soon) have huge product disruptor potential. I’m excited to see what kind of sales numbers we will see in coming quarters. I’d imagine there will be some cannabalization of the higher priced Lowell smokes sku but it’s clear the 35’s are being designed as a customer go-to product, a high velocity sku that only efficiently scaled up competitors will be able to try and price match. With one product rollout George is going after packaged flower, pre-rolls and illicit competitors. Very very large addressable market up for grabs. My money is on George and team. All imo.
Good luck with those! I may take a closer look at NZP, time permitting. I’m in Verde long term and just recently picked up PLAN.V after doing some research. They just did a smart acquisition and are bringing tolling online for soft rock phosphate - it’s a low hanging fruit project albeit capacity is initially quite limited. They will need phosphate prices to remain robust for that project while they pursue the SCM market. It has potential with a fair portion of itm warrants for added cash and limited capex plans. Also the share structure, while not near as tight as Verde, is still okay.
Yes ceo, SH and SI. All those Verde boards are more active than IH, albeit the ceo board has unfortunately turned into more of a hyper bullish echo chamber . That alone raised a major caution flag for me months ago and I assumed the stock would be in for some very volatile chop. So far going according to plan although the contrarian in me says we could get a violent shakeout and a pullback toward either the 50% or 61% Fibonacci levels. 5 is also a key back test support on the P&F chart and these pullback levels would probably scare a lot of traders and weak hands out and prepare the ground for the next upward move. Not saying it happens but I always cringe when a trade gets over crowded with everyone saying “we can’t lose”.
Yes I appreciated your analysis in those days. It certainly buttressed my own due diligence and buying enthusiasm. The project is now significantly de-risked with rapid expansion plans and increased guidance suggesting growing demand and a rapidly expanding farmer customer base, at over 5000 at last count. The big question is global potash availability and commodity pricing strength since kforte and baks are still tethered to the underlying commodity price. For now it appears Belarus is unable to export anywhere close to pre sanction levels enabling an unprecedented supply disruption, so Verde is enjoying far stronger net profits. The situation is in major flux, however, as all producers are incentivized to get every ton to market at these elevated prices so we will have to see if Nutriens recently announced expansion plans are because they’re reading the global market equilibrium correctly or if it’s a contrarian call on commodity market top. With Verde’s PFS using $368 US as the baseline that number will be crucial for investors to watch if indeed the air quickly comes out of the global potash market.
Just back on this forum after a lengthy absence.
I don’t have premium access so am unable to reply to you privately.
Hopefully you’re all up to speed on Verde by now!
The company news flow has been outstanding this year.
What remains to be seen is commodity pricing strength. Noticing a lot of price softening recently.
Slowly scaling back into Lowell after a long absence. Share structure stinks but George and team are building something special in the California king maker market.
Headwinds:
- ongoing sector illiquidity, general market weakness and possible upcoming consumer recession.
- State regulatory and taxation stranglehold on the industry driving bankruptcies while emboldening/growing the illicit market.
- Federal legislative blockade on industry support and reform along with punitive 280e taxation clause.
- Cali outdoor supply glut hemorrhaging margins and will need a large amount of suppliers to come offline to reach the bottom.
Tailwinds:
- Proposed California cultivation tax moratorium as of July 1. If it passes, that is about $160 a pound or close to $6.4M in annual savings for Lowell.
- Q1 was low water mark for the LFS segment as they shift from outdoor clients to a more consistent supply source of indoor grown product.
- The team has done a remarkable job at reducing opex and managing their very tight cash position and appear on the brink of profitability.
- The Lowell 35 pre roll rollout this summer appears to be an industry disruptor setting a standard of exceptional quality for deep value that could steal significant share at a pricing point that only scaled up highly efficient operations could compete with.
- Continuing licensee success and expansion with very limited costs or marketing.
Warrants were on sale last Friday. Added a bunch at .114 and .125.
Investors really need Brazil to open up while we wait for them to adjust and fix their significant flower issues. Turns out growing cannabis that discerning medical consumers want isn’t that easy. By Q4 CLVR better show a vastly improved top line to start closing the sizable cash burn rate. For now there’s not much to get excited about. This sector is the most reviled and capital starved sector in the entire market.
Flying completely under the radar -Wow! I’d figured there would be a few excited posts here but only crickets.
Latest guidance is very promising but let’s see them pull it off.
Since Q3 ER the stock has fallen just under 60% - it is now valued at a market cap of $72M.
CLVR now trades at price to book ratio of .82
Compare that with closest peer PCLO which trades at a market cap of $115M US. The comparison differential is even wider if you calculate their current EV’s.
So why has CLVR underperformed its best comparable peer despite arguably better “on paper” assets and a competitive advantage? (CLVR has had EUGMP, bigger cultivation footprint in Columbia and their Portugal flower operation). My guess is CLVR lost significant credibility this last year reducing guidance twice. It also cannot be ignored that PCLO has a much deeper “cannabis veterans” bench than CLVR with board and execs connected in some way to Cresco, Verano, Curaleaf (Emmac) and IM Cannabis. CLVR’s board and executive team is not built to create big cannabis link up opportunities the way PCLOs was. I view this as a key mistake when the team was put together. They should have at least added one big cannabis name to their board.
Curious if others are following this one and if you have insights or thoughts on this. Perhaps I’m missing something.
Cheers!
Considering how this company doesn’t like to disclose the real financial details of the companies they’re acquiring perhaps they should have stayed private. How are investors supposed to have any confidence that these transactions are currently or when they will be accretive. Public Companies should be transparent from the outset.
Stock may be finally bottoming out in this low 4 area around an EV to 2021 sales of around 1. It’s admittedly very cheap IF the 2H reports start to show a very significant turnaround. To say mgt lost most investors confidence is an understatement.
It’s still on my watchlist…they did cobble together several solid businesses so it’s worth monitoring albeit Auerbach went on his hype campaign to dupe spac buyers into over-paying for the assets that the early round investors were dumping for a tidy profit. At 5ish all hype is wrung out but now they have an uphill battle to actually prove themselves. Steve already proved he’s very successful at burning a lot of invested capital and now he has to prove they can build a dynamically efficient and scaled operation on top of an omnichannel approach which I’m starting to believe could be extraordinarily flawed, pressuring their margin profile considerably. So much to prove. All imo.
Correction: Lowell has around 245M fully diluted shares per the latest corporate presentation
Conservative guidance is fir $14 to $16M for Q2 but I expect them to blow the doors off that guidance with current monthly yields finally meeting expectations and the marketing/sales expansion plan for the Lowell flower pre-roll market. Cash of 13.6M may mean a raise is coming IF George is still planning his cultivation expansion plan.
I don’t know anything about TILT but if correct, on the surface, those are some compelling metrics.
Analysts update??!!! Oh boy...just how high are these “analysts” who came up with these hysterical price projections... definitely good for a laugh though...
The stock price is up 50% in barely a week and no comment here. I’ve been long since pre despac so I’m very aware of how this stock trades and this week was very different. Below is what I wrote on another message board. Just food for thought.
Per fintel the short volume as a percent of traded volume collapsed in the last few days to very low levels, so the shorts are leaning far away from this very steep move which suggests they know something , as normally they’d aggressively lean into it. The sector has not run up near as much as CLVR this week (unlike the February run up which was sector wide) so I just don’t think this is due to a possible decriminalization bill finally coming to the Senate floor. If this were a newsletter or analyst recommendation I could certainly see a one or two day run up but nothing like the activity we’ve seen the last week. Oversold rallies rarely go from oversold relative strength and money flow to almost overbought in barely a week on no news announcement and without similarly strong moves within the sector. Earlier in the week when I saw GME and AMC were again on a tear, it made me wonder if this run up in CLVR was the wall street bets group piling in (I have not been able to verify it). So, having ruled out most possibilities, if it’s not the WSB group then I think a very significant announcement is forthcoming possibly even a buyout or merger of some sort. Adding to the mystery, the warrants are at $2.55 on Fridays close but they were well over $3 the last time the commons were in this low $12 range, so either the warrants are undervalued and will catch up or this reduced spread differential is telling a bigger story...that the $11.50 strike is keeping a tight leash on the warrants pending forthcoming news. . Curaleaf just bought EMMAC for 286M to position itself for EU growth in coming years. So what would a company pay for CLVR to be able to position itself in a similar manner in the EU plus gain huge exposure to the entire Latam region? Anything less than 500M would be a really bad deal for investors imo. Just spit balling here but this latest activity is way out of the norm since its despac.
In one quarter the company went from $337.9M pro forma cash to 281M, a quarterly burn of $56.9M. After the $50M placement into GH they will have 231M and they still have big acquisition and expansion plans this year despite their chief M&A officer already leaving the company.
Even being generous and using adjusted sales of $46M, the current revenue run rate is actually lower than the 189M 2020 revenue number. The company withdrew their previously presented revenue guidance (a common bait and switch tactic currently being used by many spacs). I’ll have a listen to the cc but this company so far is living down to expectations. I had originally bought some warrants a couple months ago but sold them for flat so I’m just a curious onlooker for now. At a share price of 6.30 even with their fast decreasing cash balance the EV is near 400M yielding a reasonable EV revenue ratio. Worth following to see if they can pull this off. Last I checked MSOS had 5M shares and frankly that just does not speak highly of that portfolio manager. Anyone looking at the financials of Caliva and LCV would have known 2021 would be extraordinarily challenging. All imo
I stand by my lower range expectation. Earnings were a yawn and Q2 numbers will be more of the same. 130M of pre-spac invested capital built and bought a solid underlying asset base from the US to Columbia, Portugal and Germany. Add that asset portfolio to cash on hand and that yields a roundabout EV floor for the stock. Unless the market tanks I’d expect low 8’s to see buyer demand. The bigger picture really doesn’t begin to emerge until the 2H and 2022 visibility will be crucial to whether the Ho hum story finally changes (that or US decriminalization).
I agree, losses will continue every quarter this year, at least. I’m expecting a cash burn rate around $10M for Q1. I think they will exit 2021 with maybe $40M cash after a year of very high opex and $10M capex.
Receivables will be fine. Herbal brands is still predominantly the revenue generator for at least 1H of 2021 and GNC was bought out and there are no longer inventory reserve issues. Why are you expecting a quarterly report delay? The company just announced earnings release and conference call for May 17th.
Yes the 8K regarding the restated financials was posted almost 2 weeks ago. It’s a non event.
My take on CLVR is it will not trade much below 8, which equates to an EV of 180M. With an original $130M invested capital in the company and $80M cash providing them about a 2 year buildup runway, I think shares available below 8 would be quickly snapped up assuming the stock market is not about to collapse.
I also do not expect the stock to trade above the 12 - 14 strong resistance range possibly for the rest of 2021 unless a major catalyst materializes (or the sector becomes a momentum trade again...admittedly unlikely without decriminalization). If CLVR continues to announce middle of the road pharma partnerships the market will yawn because the lead times are exceptionally long, upwards of 1.5 to 2 years before potential revenues materialize. I also don’t expect much from the cbd product they’re developing for their Herbal brands distribution.
There are frankly only two catalysts that change this range bound theory imo. US decriminalization with a path for CLVR to import/partner or a significant partnership announcement with retail cpg in one of the legal markets. Just because they make medicinal grade product doesn’t mean it can’t be sold downstream into any number of speedier to market non medicinal retail channels. Without a major catalyst the Clever Leaves engine is on idle. So, after starting off quite bullish (thanks to their very misleading investor presentation) I’ve seen the error of my ways and am neutral to mildly bullish near to medium term and far more bullish further out as CLVR becomes a real cog in the global supply chain. That’s my take for now...
Apparently this tiny rather unintelligible ego war continues here sans technical or fundamental due diligence on the actual company to support their positions.
What an oxymoron you are, claiming to be an old man yet rambling on with ROFLs and LOLs like a very young and uninformed dolt with little respect for others and no imagination outside of your black and white logic. Wow! Good luck with that!
While we’re both clearly bullish, I respectfully disagree with your thesis at least near term. It’s all about California. The distribution prior to buyout was around 175 to 200 dispensaries and they were doing $15M a year. Due to pricing pressures, lack of funds and distribution along with quality issues the brand lost the top spot for the premium market. With the Indus platform underneath this brand I think they have the potential to quadruple sales on an annualized run rate as they exit 2021 with aggressive marketing and distribution expansion (not to mention the tailwind of added retail coming online throughout many counties in the state offering even more potential shelves for product. The brand equity must be fully built and the leader trophy claimed in the California market before aggressively looking toward inter-state commerce. Lowell was selling 1100 - 1300 lbs a month last year, if you quadruple that you’ll quickly realize the current cultivation footprint (and especially the currently poor yield throughput ) cannot even support just the potential premium flower sales in California. Once they close on these added cultivation sites and complete buildouts, hopefully within 12 months, then they’d actually have capacity to meet the Cali market and start crossing borders, assuming legalization includes inter state commerce. The bigger question for now is how is George maneuvering with these licensing deals? If/when it is the dominant brand leader of California, the equity value premium would lead to some far better lucrative licensing deals or does he continue to opportunistically take the cash now and sign more deals like he recently did with AWH.
I do not believe decriminalization and a medically legal cannabis framework in the US. is priced into the current 250M EV for CLVR. If Schumer really does bring his bill to the floor in a few weeks, the risk off marijuana sector trade could certainly be in for an about face.
Agreed. I have my cores and then try and trade it now and again for some spending money...
Since I’m clueless to the real brand value that George espouses, what’s your take on Lowell smokes? Do you think this “lightning in a bottle” brand really has the long growth runway in California that George seems to believe it has? As a user is the product really head and shoulders above most premium brand competition? Since there are so many brands coming out of Cali, it’s hard as an outsider to discern the hype from reality.
I think the Senate will back down toward what Biden wants
(link below), which would be a great scenario for CLVR.
https://www.marijuanamoment.net/biden-wont-commit-to-sign-marijuana-bill-if-passed-by-congress-press-secretary-says/
Impressive technical divergence has developed on the daily chart. Could be almost ready for an oversold bounce toward the 8.50 to 9.50 resistance points.
There is certainly some excellent potential with this company but I believe it’s best viewed through a very long term lens. Share structure is very good. Management is very aligned with shareholders. YOY growth was good albeit this year projections are only for half last year’s growth, which begs the question is Kforte and the newly developed baks product just a niche offering? They’ve barely tapped the potential market in Brazil and have expanded the sales/marketing team and grown the customer base and yet already growth is expected to decelerate? All the while not yet achieving scale and therefore showing bottomline erosion of the improved margin profile due to increased delivery and marketing costs.
It also bears mentioning that the bonus for the ceo was as much as 2020 net income. The ceo has been shareholder friendly (a rare occurrence in junior mining), not completely diluting the share base; however, his compensation and annual share incentivizes are egregious and frankly a far higher standard or company achievement base should be set for him to be profiting as he is currently doing. My hope is this unchecked behavior gets reigned in and only exceptional bottom line improvements merit such compensation.
Still I like the potential a lot, which is why I hold. BAKS could prove disruptive if pricing and effectiveness both prove a better option than the tried and true alternatives. Only the farmers can prove this out though so it’s just a rather slow season to season word of mouth type growth trajectory (ie slower than most investors like). That’s just my take.
This board has been overrun by a blind bull and a blind bear.
I’ll let you two senselessly make your paper thin cases as to why you know it all.
Peace out!
I had a quick look at the business acquisition report posted on sedar. Obviously the 2020 financials are awful, specifically the LCV and Caliva opex and gross margins. I don’t see meaningful improvements on these until probably Q4 due to both business integration and expansion plans (not to mention additional acquisition integration), which will mean a huge 2021 cash burn as they expand these businesses. I’d expect close to 100M cash burn this year.
They bought Sisu for less than 1X 2020 sales which was relatively cheap. It is not hard to see where a significant portion of the projected 2021 revenue gains will come from. Sisu made 100M last year in distillate sales with paltry margins. Once all that product no longer flows through the wholesale market and instead is funneled only through owned brands, it will nicely feed the top line and the margin profile.
Is anyone familiar with LCV and their products? I look at their financials and I cannot believe they were bought for about 5X 2020 sales (if you include the earn out shares coming to them). Perhaps they have a lot of brand equity that merited paying such a premium? Most smaller scale acquisitions I’ve seen have been going for 2 - 3X sales, so frankly the close of LCV looks way overpriced. If they were bought mainly for their distribution then it just way overpriced since distribution is generally a far lower margin side of the business and would not merit a premium valuation.
Caliva, the granddaddy of them all was bought for 7X 2020 sales (including potential earn outs), which is high but not outrageous considering the name recognition and brand cache they’re offering along with distribution/marketing channel they’ve been building. However, 2020 revenue and gross margins are unimpressive and considering annual opex was slightly higher than annual revenues, they appear to still be in the prove out phase of this system.
Aside from the stock popping due to a media spot or headline making acquisition, I think it’s going to take until the end of the year to really see if management can actually achieve many of their projections from their presentation. I think any early margin improvements will be solely from Sisu as margin gains with the other operations will require both scale from expansion/build out and management continually driving efficiency along the entire supply chain, which may also require a shift away from any third party and agency brands (I’ve been invested in Lowell farms for over a year and part of their core strategy toward operational efficiency was to deemphasize or close out all third party brands and funnel primarily owned brands through their distribution platform to drive significant opex improvements). All imo
The 2021 revenue outlook reduction was without a doubt a slap in the face to any investor closely following this company. The burn rate will be significantly higher this year than initially projected. Yes they will probably exit 2021 with barely $40M cash. Very disappointing developments without a doubt. But again your smarmy mocking tone is absolutely not useful except to perhaps bolster your ego.
I expect the stock to remain range bound between 9 to 14, awaiting a significant catalyst. Take or pay announcements won’t cut it unless they are very significant. Better visibility in the 2H would also possibly catalyze the stock. Decriminalization is the big behemoth outlier event. All imo
Actually I would expect them to be called almost as soon as that VWAP is hit (quite faraway for now...) Steve even mentioned their ability to accelerate them on one of his recent interviews which says a lot to me, when a ceo is already accounting for that added cash availability. They want to mop up Cali and enter NY on top of amalgamating the three businesses from this spac. 330M doesn’t go that far.
At a current EV of 400M I think the commons are relatively cheap now. Seems like a lot of speculation got wrung out. Lots of investors have been pretty frustrated and sold in disgust as all the hype around this company didn’t pan out just yet. Admittedly this amalgamated behemoth has a lot to prove to right the ship but all capex is behind them and they’re cash rich, so if the markets see them clean up the opex in coming quarters there should be a speedy re-rating of shs.
The warrants offer much more leverage than commons for a lengthy swing trade, willing to hold for a few years if need be to see this play out. The warrants have been impressively resilient as the commons collapsed but there’s still a good possibility they test the 1.50 support area.