RE:Insolvent by October?Hey your math you say you are great at say this company would be insolvant last year........did I miss something? I do not remember that happening
mrmomo wrote: Since i posted about the massive problems & serious dilemmas Canopy faces this year, the stock price has dropped another 50%. Now by no means am i an oracle with a crystalball, but i'm pretty good with numbers & great investments, and what i see for Canop's future seems to be very bleak. After running running my numbers a second, and a THIRD and final time, i always come with the same exact scenario. Insolvent by near end of year. This assessment is based on several facts & factors, with some degree of flexibility, but the end results are more or less always similar.
The simple fact of the matter is that Canop's costs are completely out of control, and no matter how much maket share they gain (or lose) or how much more product they sell, they cannot generate ANY positive cashflow from their operations. In fact, the more they sell, the more they will lose. Not a question of a lack of market share or volumes here, the problems are really at the core of their business model, with a few other small factors. In addition, having this hude debt problem on their books, isn't helping matters. It's not servicable anymore nor sustainable. I estimate that at the crazy current burnrates, these guys run out gas & money somewhere around Halloween. Now, if that little surprise isn't a real godam trick or treat for s/h's, i don't know what is.
Therefore, since i don't expect Canopy managment to surrender to BK so easily or at least to go down fighting, i assume they will take ALL the neccessary steps to avoid it. And since their debt consists mostly of bank debt, they can't even force or encourage their creditors to convert to equity. There's only one solution here to avoid insolvency, raise more cash through more equity issuance and payoff that bank debt asap.
If they want a chance to survive! And this my friends means that because of the size of that debt, current equity holders will be totally wiped in the inevitable restructuring to come. There's no way out of this friends, not for the company or it's holders. I also considered a big competitor Cura, Tilray or some other to possibly buyout the company BUT i do not beleive anyone will be willing to take on all that debt, while it's still there and nearly all cannabis company's are slimming down or re-organizing themsleves and no one is profitable btw.
Someone here could double or triple check my figures or my assessment, BUT i'm very rarely wrong on these issues. I figure once most retail people know about this, the stock will dump another 50% from current levels. As far as most influencial institutional investors go, they left long ago imo. For those deciding to continue holding on here, GOOD LUCK, you'll need it.
GTLA