Cannabis Chart of the Week: How Aggressive Are 2nd Quarter EBITDA Margin Estimates?
Portfolio Pulse from Viridian Capital Advisors
Analysts expect 2nd quarter EBITDA margins to be higher than 1st quarter for nine out of fourteen major cannabis companies. However, most companies are expected to have lower Q2 23 EBITDA margins than Q2 22 due to wholesale pricing pressures and inflation-driven cost increases. Outliers include Planet 13, Ascend, Trulieve, Green Thumb, and Schwazze, which are facing various challenges. Jushi, Columbia Care, Terrascend, and AYR have higher expectations due to various improvements and strategies.
July 31, 2023 | 6:07 pm
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Ascending
NEGATIVE IMPACT
Ascend had production issues in New Jersey, causing them to lose a significant percentage of their crop.
The company's production issues in New Jersey could negatively impact its stock price.
CONFIDENCE 90
IMPORTANCE 70
RELEVANCE 80
NEGATIVE IMPACT
Planet 13 is facing pressures in Nevada and lack of seasonality between Q1 and Q2.
The company's challenges in Nevada and the lack of seasonality between Q1 and Q2 could negatively impact its stock price.
CONFIDENCE 90
IMPORTANCE 70
RELEVANCE 80
NEGATIVE IMPACT
Schwazze is projected to have a lower 2nd quarter margin as Colorado and New Mexico pricing continues under pressure.
The company's pricing pressure in Colorado and New Mexico could negatively impact its stock price.
CONFIDENCE 90
IMPORTANCE 70
RELEVANCE 80
NEGATIVE IMPACT
Trulieve is projected to have lower Q2 margins as they discount old product in Florida and clear out product to exit Massachusetts.
The company's strategy of discounting old product and exiting Massachusetts could negatively impact its stock price.
CONFIDENCE 90
IMPORTANCE 70
RELEVANCE 80
NEUTRAL IMPACT
Columbia Care has been ratcheting down costs in case the CL deal doesn’t happen.
The company's strategy of ratcheting down costs could have a neutral impact on its stock price.
CONFIDENCE 90
IMPORTANCE 70
RELEVANCE 80
NEUTRAL IMPACT
Green Thumb is getting more aggressive in working capital management by discounting inventory.
The company's aggressive working capital management strategy could have a neutral impact on its stock price.
CONFIDENCE 90
IMPORTANCE 70
RELEVANCE 80
NEUTRAL IMPACT
Jushi's Q2 22 EBITDA of $0.5M missed estimates by 86%. EBITDA has beat expectations for the last two quarters, but Q2 23 estimates may still prove aggressive.
The company's missed estimates in Q2 22 and potentially aggressive Q2 23 estimates could have a neutral impact on its stock price.
CONFIDENCE 90
IMPORTANCE 70
RELEVANCE 80
POSITIVE IMPACT
AYR has higher expectations based on new management, scaling in New Jersey, leaving Arizona, and gaining share in Florida.
The company's new management and scaling strategies could positively impact its stock price.
CONFIDENCE 90
IMPORTANCE 70
RELEVANCE 80
POSITIVE IMPACT
Terrascend has dramatically improved its situation by scaling up in New Jersey and rationalizing its Michigan operations.
The company's improvements in New Jersey and Michigan could positively impact its stock price.
CONFIDENCE 90
IMPORTANCE 70
RELEVANCE 80