Earnings Report Could Strongly Influence MedMen Stock

MedMen Enterprises  will announce its fourth quarter and fiscal 2019 results on Oct. 28 just after the closing bell. The Culver City, California-based producer of medical and recreational cannabis products announces this at a time where the stock seems to have reversed a move downward that took it to a low of just below $1.34 per share. Now, traders will likely watch closely to see if the report can arrest the decline of MMNFF stock.

MedMen Earnings Forecasts

For the fourth quarter, analysts forecast a loss of eight cents per share. They also foresee revenue coming in at $48.13 million. Since the stock has only traded since October of last year, traders do not have year-ago numbers with which to compare. However, the company missed estimates by a wide margin in its previous two quarterly reports.

For fiscal 2019, Wall Street predicts a loss of 39 cents per share. If this number holds, it represents a significant improvement from fiscal 2018, where MedMen reported losses of $2.77 per share. They also forecast revenue of $131.75 million. This would amount to a 231.2% increase from fiscal 2018 when the company reported revenue of $39.78 million.

Where Traders May Really Focus

Both the merger and the expansion may have cost MMNFF stock dearly regarding its stock price.

However, investors may listen to this report for more than just numbers. On Sept. 11, the company won approval from the Department of Justice to finally complete its purchase of PharmaCann. Hence, investors will want to know where that merger agreement stands.

Moreover, MedMen has spent and sustained losses to expand its footprint. In recent weeks, it has opened three new stores in Florida. This is the fourth store in Florida and the 29th nationwide. The company also plans to open eight additional stores in Florida alone by the end of 2019.

However, both the merger and the expansion may have cost MMNFF stock dearly regarding its stock price. At its peak, MedMen traded as high as $7.57 per share. However, as costs rise and losses mount, traders have steadily taken down marijuana stocks large and small. Today it trades in the $1.50 per share range. While the equity has shown signs of volatility in recent days, this will represent a drop of more than 80% from its 2019 high.

Final Thoughts

Traders will probably watch the Oct. 28 earnings report for more than just numbers. The company’s rapid expansion has come at the cost of its stock price. Now with MMNFF stock at around $1.50 per share, many wonder whether a recovery has truly begun or if the move constitutes a dead-cat bounce on its way to new lows.

The company has spent millions on expansion. While these outlays may serve the company well in the long run, the falling stock price indicates a possible lack of patience with that process. The upcoming report gives the company a chance to update Wall Street on its progress. However, with the need for a catalyst, the success of this report may hinge on how much patience and confidence MedMen can win with investors, rather than whether the company can beat specific estimates.

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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