Prediction for current quarter resultsOGI's current quarter ends at the end of this month. They will report the earnings from the quarter sometime at the end of April.
While I expect positive news releases from the company between now and then, my expectations for the current quarter results are pretty low. Why you may ask? There are a number of reasons:
1. First and foremost, the company has not implemented any actions since November to dramatically change the fundamentals of the company (no acquisitions, sales growth will be reported but will still be modest....).
2. The company has invested a lot in infrastructure for future benefits. This includes adding management (VP international sales). They will incur the costs of implementing these initiatives yet they will have produced nothing in terms of sales increases in the current quarter. S,G&A expenses are now reflective of a rec market but the sales and gross profits only reflect medical.
3. The company has recently added $115 million in debt at 6% interest. That is a whopping $7 million/year in interest cost or $550,000/month. One month of interest expense will be recognized in the current quarter. They must put this money to use quickly or it will get chewed up for "other corporate needs". They cannot (or should not!) use this money to pay the day to day bills. If they do, I will sell all my holdings immediately.
Make no mistake about it- OGI will record significant losses in the current quarter, regardless what news releases are issued between now and the end of April.
I believe the SP of $4 is reflective of their current situation. I recently bought a bunch $5 so I have some at losses but my average cost is around $3.80 per share.
The company need a positive catalyst to affect the SP significantly from here.
Frankly, the only way I see the SP increasing dramatically in the short term is if they got bought out. Even if they announced the acquistion of an international company, I don't see that warranting a significant premium over the current SP, unless the acquired company is highly, highly profitable. And if that was the case, $180 million or so in cash won't get them much in my opinion.
Fingers crossed on positive developments in the days and weeks ahead. Unless you are a trader in this stock, ignore the daily ups and downs. The recent fluctuations are irrational and clearly the actions of traders. If you are long, don't pay attention to the hour by hour SPs. You will get a headache and make no sense of the actions.
All in all, while I feel bullish about the company, this is far from a slam dunk and my investment is quite speculative and highly risky.
Good luck to all.
Marc24