RE:RE:RE:RE:jmo, I don't see any pot company taking over any other one.The market today doesn't think any in the sector are going to survive by your logic Meth, the market, SP says nothing today but that the sector needs to retool/ restucture and produce quality not quantity...and now with Corona on top of that.
There is a reason why the right-sizing is basically the template of Supreme's operations and almost from top to bottom. Your therory of failure and collapse of FIRE is a real possibility for many as they try to grow and shelve quality herb at scale...FIRE has been doing this from the jump and is just about to get up to full production as we speak.
It is definately time to spew this bullshite as FIRE will be cash flow positive by FQ1/21 if not next quarter, that is if there is nothing unexpected that negatively impacts operations over the period.
There is a big difference between FIRE and the majority of the rest in the sector, they are right-sized and have been all along they just need to ramp up the production of their already top quality menu and get it on the shelf and that is happening today and will ramp up as per guidance. You are correct about one thing if they continued to not sell product they would be done like Christmas bird but that is not the case and I would suggest doing your DD and see for yourself but you have done that and already know the answer.
According to last news from the company they are on target as per guidance and the sales/revenues needed are ramping up now and will continue to full production over the coming weeks/months. Buy now or pay more later, JMHO...Opt
Method wrote:
johnale wrote: There is a little bit of a logical discrepancy in the statement:
"that being said you can make 4x your money on FIRE.DB plus interest just as long as they don't go bankrupt and are able to pay the debt off even if the stock is lower by then."
If..... fire is able to pay their debt - then that means cashflow will be of sufficient quantity to support the pay-back of 100mil then...... the EQUITY side - aka share price - may 10X the current share price.
If fire just "doesn't go bankrupt" or they refinance the debt - it may be a long time before you ever see the money from those debentures. might as well buy BANK stocks which are giving 7% return and equity portion will 100% be ok in 18months. there is no reason to invest in supreme if you don't think they will be profitable and successful - the debentures or stock.
BUT>>>> if you think fire will be profitable from here on out - the stock presents an opportunity to realize gains far greater than the debenture. debenture capped at 4x..maybe 3.5x based on ask.
Stock tradding at 15x ebita (once the industry matures) like alchol - even at 30mil annualized - 7.5mil profit/q (27mil quarterly revenue (maybe less)) from here on out - equals 450mil valuaiton.
1.27/share - which is more than 5x your money from here.
I hope you are right, they get free cash flow positive and are able to refinance the debt . The market currently doesn't believe they will be able to. If they aren't able to, they will dilute the equity. Why not own the debentures instead and have a higher probability of making money?