RE:RE:RE:RE:RE:Cornerstone on Q3 resultsthanks for your responses GM, you make some good points. My post was as much a frustrated rant as it was engineered to discuss all the pretty and ugly aspects of this snn investment.
I said the risk/reward is ugly because in the short to midterm, I see a big time cash burn coming and the revs picture is very cloudy up to 3Q 19, which is why I do not have the certainty you have that another pp isn't coming. The answer to the projected cash burn question on the conf call did not inspire confidence in me that they will not be forced to do another raise and that would certainly continue to put downward pressure on the stock. I can see the sp at 1.75 - 2 just as easily as 4 - 4.50 in the near term, so my preceived risk/reward is about 1 for 1 right now, which is not very compelling (admitedly fugly might have been an over-statement).
In terms of the CAD issues, my frustration is mostly due to the lingering questions around how a spinout can truly occur with the timetable they've provided. I agree with bluechip, the CAD story is really a 2020 and beyond story and not before, so unless NHS revs do turnaround significantly, I have a very hard time imagining a successful spinout before the modular grow is contributing to the revs.
I hope you are correct about LTYR. I find it interesting that you immediately need to point to worse acquisition deals for comparison and ignore the fact that OH paid 1.5X sales for the largest and probably most seasoned distributor in ca and snn paid probably 5.X sales for a late arrival team with just a not a ton of experience in the mj sector. From my purview, smart mgt does not over-pay for an unproven business team and again the answer on the conf call when asked about how many trucks they have and dispensaries they serve was immensely underwhelming! I agree with your other points though in terms of the importance of having this network and system in place and ready come time to deliver product.
I do not know why sunniva has not called me for my expertise either. I've given them my number but alas its just crickets... I will acknowledge probably not being the smartest guy in the room having sustained a 45% loss on this investment thus far. But in all seriousness, I believe the retail push is a much larger risk than the wholesale plan ever was. It will rely not just on product and distribution execution but now also on very successful branding enabling their products to stand out on shelf space with hundreds of other products. I really hope they pull it off but if any investor in snn does not acknowledge that the retail pivot is a new and additional layer of execution risk, then I beleive they'd be fooling themselves. Listen to the OH guys if you want a lesson on branding in ca, they eat sleep and breathe it because they know its everything, its the life or death of your company.
On your last point I completely disagree. There is actually every reason for the sp to have performed as it has. Mgt has squandered a large portion of its credibility whether you look at the sequentially declining revs, the CAD facility issues and wasted capital or the cali delays and cost overruns. Also, the stock trades with a low easily manipulated float on a readily manipulated exchange and the mj sector is being shorted like crazy because the hedgies smell blood and are positioned short against the bloated leaders in the sector, which are slowly crashing back toward less lofty PSRs!
I bought snn like many here because it has the potential to be a true powerhouse in cali. A lot of their cards will get shown in the next 3 quarters and we will finally get to see if mgt is capable of putting this grand strategy together and show they can actually execute. For now, despite my concerns I'll hold but I agree with sunrize that it would be incredibly foolish to add more with so many unknowns. Just my take.