Consider Trading 1933 Industries Stock After Update

1933 Industries [stock_market_widget type="inline" template="generic" color="default" assets="TGIF.CN" markup="(CSE: {symbol} {currency_symbol}{price} ({change_pct}))" api="yf"] [stock_market_widget type="inline" template="generic" color="default" assets="TGIFF" markup="(OTC: {symbol} {currency_symbol}{price} ({change_pct}))" api="yf"] provided a corporate update this week. The Chilliwack, British Columbia-based cannabis company revealed news on some of its U.S. operations as well as the balance sheet.

TGIFF rose in Tuesday trading following the update. Unfortunately, the company has failed to turn around a stock that has now slid as low as 14.8 cents per share. Unless and until it can improve its profitability picture, 1933 Industries stock will struggle to profit investors other than through a trade.

1933 Focused On Expansion, Balance Sheet

Despite a share price that stood at 19.5 cents per share in Tuesday trading, 1933 Industries still appears poised on expansion. The company’s corporate update pointed to activities that indicate future growth.

The company continues to emphasize a path to what it calls “scalable profitability.” It reported raising $36 million and adding $60 million in assets to the balance sheet. The firm completed its Las Vegas cultivation facility, which they believe will yield a five-fold increase in flower production as well as an increase in raw materials for cannabis concentrates.

The company also expects to complete a manufacturing and cultivation facility in California in November. In addition to production, it also mentioned its Canna Hemp wellness line, which now sells in over 800 retail outlets according to the update.

The report also discussed the financial state of 1933 Industries, saying it maintains a “solid” balance sheet. During the previous quarter, the company lost $7.065 million.

Despite the losses, the company appears to have some breathing room financially. With just over $19.75 million in cash, it can sustain this pace for a time before it has to turn back to the capital markets. Also, it holds just over $9.86 million in debt against about $46.94 million in stockholders’ equity. Even if it cannot turn a profit anytime soon, it should at least keep its doors open for the foreseeable future.

1933 Lags Key Peers

1933 Industries products appear in over 800 stores, which falls short of CV Sciences’ 5,400 and Charlotte’s Web’s 8,000.

However, investors still have cause to worry. Increased production capability will offer less value in a market producing too much cannabis. That may explain why revenue growth has struggled. Sequential revenues fell in the fourth quarter of 2018. Also, despite a revenue recovery in the first quarter of 2019, they did not match levels from Q3 2018. Moreover, selling, general, and administrative (SG&A) expenses remain barely below revenues. For Q1 2019, revenues of $4.597 million remained barely ahead of the $4.119 million spent on SG&A.

Further, 1933 Industries also has to catch up on the retail front. Appearing in over 800 retail outlets certainly helps 1933’s Canna Hemp brand. However, this falls short of CV Sciences (OTC:CVSI), which sells its products in more than 5,400 retail stores. It also does not compare to Charlotte’s Web (TSE:CWEB.TO, OTC:CWBHF), whose products now sell in over 8,000 locations.

Trading TGIFF Stock

The mid-October update may help make TGIFF stock a trade. 1933 Industries has seen its stock fall by almost 60% from its 52-week high. However, the update took it higher by more than 19.6% in Tuesday trading. Moreover, while profitability appears far off, it has the resources to survive for several more quarters. At just 19.5 cents per share as of the time of this writing, TGIFF stock could make for a profitable trade, or perhaps more.

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1933 Industries is a market awareness client of Capital 10X.

The opinions provided in this article are those of the author and do not constitute investment advice. Readers should assume that the author and/or employees of Capital 10X hold positions in the company or companies mentioned in the article. For more information, please see our Content Disclaimer.

Will Healy
Will Healy is a freelance business and financial writer based in the Dallas area. In addition to marijuana, energy, and mining stocks, he has also written about real estate, insurance, personal finance, and macroeconomics. In addition to Capital 10X, his articles have appeared on sites such as InvestorPlace, Yahoo! Finance, MSN Money, Kiplinger’s Personal Finance, GOBankingRates, and Seeking Alpha. Will holds a B.S. in Journalism from Texas A&M University, an M.S. in Geography from the University of North Texas, and an MBA from the University of Texas at Dallas. Phone: 416-721-8257. Address: 682 Indian Road Toronto, Ontario M6P 2C9.
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