New Funding Makes TILT Holdings Stock A Speculative Buy

TILT Holdings [stock_market_widget type="inline" template="generic" color="default" assets="TILT.CN" markup="(CSE: {symbol} {currency_symbol}{price} ({change_pct}))" api="yf"][stock_market_widget type="inline" template="generic" color="default" assets="TLLTF" markup="(OTC: {symbol} {currency_symbol}{price} ({change_pct}))" api="yf"] stock spiked higher on word that they received shareholder financing. The Cambridge, Massachusetts-based cannabis services company received approval for funds that should help fund research and reduce interest costs.

However, TLLTF remains a penny stock trading well off the highs enjoyed before a massive write-down. Although TILT Holdings has barely begun to recover from its enormous loss in value, the financing could change the investment outlook for TLLTF stock.

TILT Receives $35 Million in Funding

TILT just closed on a private placement of up to $35 million of senior secured notes. The company had already closed $25.6 million worth of loans. Now, an additional $9.4 million will close in the next 45 days subject to approvals.

They plan on using this to execute what they describe as a rapid yet disciplined focus on profitability. Despite the recent controversies surrounding vaping, they will continue to allocate capital to its vaping subsidiary, Jupiter Research.

They also plan to retire a $20 million bridge loan. The note, which the firm took out in April, bears 18.75% in interest. These new notes will mature in 36 months and carry an interest rate of about 8%.

TILT’s Recovery Has Just Begun

TILT stock has struggled as the Canadian ticker lost close to 90% of its value since the beginning of the year. Much of that came in May when the company took a $500 million write-down, which led to the ousting of its previous CEO.

TILT stock bottomed at 17 cents per share following the stock option surrender. In less than a month, TLLTF has doubled.

Interim CEO Mark Scatterday has worked to change both the company’s image and finances. Scatterday rebranded the company through a new website and a new ticker on U.S. exchanges, TLLTF. He also persuaded founders to surrender more than 60 million shares in stock options, the main reason for losses in previous quarters.

TILT stock bottomed at 17 cents per share following the stock option surrender. In less than a month, TLLTF has doubled. Thanks to the new debt issuance announced on Nov. 4, it has risen to 34 cents per share.

Moreover, the funding improves the company’s prospects for recovery much more than the balance sheet might indicate. The new funding looks relatively small given the fact that the company lost $48.94 million in the previous quarter alone. However, investors need to remember that the forfeited stock options accounted for $47 million of those losses.

Should I Buy TILT Holdings Stock?

Despite the funding to stay in business for at least several quarters to come, the stock remains well under $1 per share. This indicates that investors can still consider TLLTF a speculative investment despite the higher stock price.

To be sure, investors should still consider this speculative. Despite an improved outlook, profitability looks far off. Moreover, the vaping sector continues to suffer from image problems amid more reports of illnesses related to competing vaping products.

However, with more funding and much less expense, TILT Holdings is far away from having to shut its doors. If it can ride out the vaping controversy and forge a path to profitability, investors could still earn massive gains from TLLTF stock.

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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 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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