Supreme Cannabis Issues Q4 Guidance – Revenues Are Burning Bright

This week is slated to be an earnings blitz in the cannabis space and there’s one company that didn’t want to miss out on the fun.

The Supreme Cannabis Co.  issued guidance for fiscal Q4 and fiscal 2020 and investors should be very excited. This is yet another strong showing by a cannabis company and bodes well for the entire industry.

After a tough end to last week, blamed largely on ETF rebalancing, Supreme started the week off well with an 8% pop on Monday. With today’s news, we expect to see a further stock price increase.

We break things down below. Stay tuned for a management interview with CEO Navdeep Dhaliwal coming tomorrow — we discuss all things Supreme Cannabis.

Q4 Guidance Shows Strong Growth

Revenue for Q4 is expected to increase nearly 100% quarter over quarter to $19 million. This would be a 450% increase compared to 2018 Q4. Supreme is also guiding to positive adjusted EBITDA for the fourth quarter.

Clearly, their approach of quality over quantity appears to be paying off. We are now starting to see how their reputation for high-quality cannabis translates into strong demand for their product.

With the development of more “premium” experience-driven brands underway, it will be exciting to see how Supreme can translate their consumer-focused approach to other brands.

Fiscal 2020 Looking Positive

With the reputation of the 7ACRES’ brand, Supreme should have no issues selling their product in retail stores.

Guided net revenue for the year is $150-180 million. That will be good for a jaw-dropping 400% growth year over year (from the midpoint). While that news is impressive in itself, the best news is the fact they are guiding to positive adjusted EBITDA for the year.

They are also planning on completing their transition from wholesale to retail, which should bode well for their top line at a minimum. With the reputation of the 7ACRES’ brand, Supreme should have no issues selling their product in retail stores.

Lastly, they have stated they are fully funded for all planned initiatives, which means no more dilutive cash raises coming. Any additional financing that is deemed necessary will be through non-dilutive financing.

Supreme has also decided not to exercise its option to consolidate shares. As a share consolidation has no effect on the company’s underlying value, we see this as a neutral move. If anything, it speaks to management’s confidence in the future growth of Supreme’s stock price.

After reviewing the guidance, it’s clear why Supreme wanted to get in on the hype of this weeks earnings blitz. Investors in FIRE should be very excited by what they see.

The full financial results will be released on Sept. 17, 2019. Stay tuned for Capital 10X’s full review.

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Supreme was 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.

Evan Veryard
Evan Veryard has a Bachelor's of Chemical Engineering from McGill University and a MaSc. of Chemical Engineering from RMC. He has over 6 years of research experience focusing on industrial materials. Address: 682 Indian Road, Toronto, Ontario, M6P 2C9. Phone: 416-721-8257.
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