SLANG Worldwide’s Challenges Not Tied To Vaping

SLANG Worldwide [stock_market_widget type="inline" template="generic" color="default" assets="SLNG.CN" markup="(CSE: {symbol} {currency_symbol}{price} ({change_pct}))" api="yf"] [stock_market_widget type="inline" template="generic" color="default" assets="SLGWF" markup="(OTC: {symbol} {currency_symbol}{price} ({change_pct}))" api="yf"] may have plateaued as management addresses concerns surrounding vaping. SLANG, a developer of cannabis products and packaged goods, saw its shares stabilize as the company’s CEO explicitly stated that no investigations had tied its products to the illnesses.

However, the stock has lost more than 80% of its value since the spring. This leaves investors wondering if the recent stability has become a reprieve or a sign that SLGWF stock will finally turn around?

SLANG Not Tied To Vaping Illnesses

CEO Peter Miller called the vaping controversy, “something we take very seriously.” He added:

“We encourage investigation and research into the causes of this issue and hope that our collective understanding of the results leads to more thorough and effective regulation of the industry.”

Investigators have not tied the vaping products alleged to have caused the illnesses and deaths to SLANG. Moreover, it does not operate in Massachusetts, which has issued a temporary ban on vaping products.

Moreover, SLANG offers a diversified array of cannabis-related products. The company also launched what they call SLANG Health and Wellness. This division will focus on CBD-related products. They also received a license to operate in Greece along with partner GCC Pharma. Furthermore, they offer edibles and flower products through the purchase of Lunchbox Alchemy and Avitas brands.

SLANG’s Challenges Lie in The Financials

However, vaping is likely not the company’s most impending concern. Like many smaller cannabis firms, the decline in marijuana stocks over the spring and summer has hit SLGWF stock. SLANG peaked at $2.80 per share in April. Still, since that time, it has steadily slid, falling as low as 35 cents per share recently. After bouncing back to 47 cents per share, it has again slid to around 39 cents per share.

The Canadian market also faces a slew of marijuana companies and a glut in dried cannabis. Both of these factors have not only hurt SLGWF stock, but they have also pressured larger-scale equities such as Canopy Growth [stock_market_widget type="inline" template="generic" color="default" assets="WEED.TO" markup="(TSX: {symbol} {currency_symbol}{price} ({change_pct}))" api="yf"] [stock_market_widget type="inline" template="generic" color="default" assets="CGC" markup="(NYSE: {symbol} {currency_symbol}{price} ({change_pct}))" api="yf"] and Aurora Cannabis [stock_market_widget type="inline" template="generic" color="default" assets="ACB.TO" markup="(TSX: {symbol} {currency_symbol}{price} ({change_pct}))" api="yf"] [stock_market_widget type="inline" template="generic" color="default" assets="ACB" markup="(NYSE: {symbol} {currency_symbol}{price} ({change_pct}))" api="yf"].

Is There a Buy Case for SLGWF Stock?

With even the largest marijuana stocks struggling, investors have to wonder if SLANG Worldwide has any hope as a $90 million company?

I think the previous quarterly report explains the company’s situation. In August, SLANG reported a GAAP profit of six Canadian cents (4.5 cents) per share, as well as revenue of C$7.2 million ($5.4 million). This represented a 1,536.4% revenue increase from the same quarter last year.

The nature of the profit played into this. The company still reported operating losses of C$9.59 million. The “profit” came from a C$26 million fair value adjustment in their options owned in other companies. This could explain why earnings failed to stop the slide in SLGWF stock.

As of the last quarter, they revised revenue guidance downward for fiscal 2019 at C$70 million to C$100 million. SLANG cited a supply glut in cannabis and a slower pace of legalization as reasons why.

The company also stated its goal of becoming a “very large and very profitable” company. However, the previously mentioned industry headwinds and the operating losses stand in the way of achieving that milestone. Unless and until the financial picture improves considerably, I see little that will prevent the further slide in SLGWF 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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