Yes, good article. Thanks for posting.
I agree with the assessment that future value will depend on sales of high margin internal brands. To grow such sales, I think Origin House will need to invest in current production capacity and buy new capacity (125,000 sq ft really isn't that much). That growth will require cash and stock issues (including cash to cover operating losses until they get there).
There is never any discussion of competition in these articles (Flow Kana and its $125 million private equity war chest?).
I continue to worry about cash reserves. The article references $75 million, but $13.5 million of that will go with Trichome when it completes its RTO in two months (I got this from investor relations and the Trichome CEO). Another $2.5 million just went to 180 Smoke sellers on the close of that deal. Loans to external brands take up cash and drive lower margin distribution revenue (as stated in the article). How much cash was used to cover operating losses in 4th quarter 2018 and 1st quarter 2019?
I do think Origin House is undervalued relative to other leaders in the cannabis sector based on price to sales ratios.
The stock may dip significantly when the next ER comes out, but it should recover if they can raise additional capital to build a large enough cash war chest to pull of their strategies. Hold on for a bumpy ride. Prepare to buy the dip and/or with new developments.
I think Origin House would definitely take off with an order of magnitude deal (move to larger stock exchange?, merger with large producer?, $1 billion investment from Molson?, ???).
AI
