RE:RE:RE:RE:RE:Dumpster So to recap, you dont think theres value here, but are here daily. Okay fair, bulls make money, bears make money, pigs get slaughtered. We all have our positions long or short. Fair.
You dont think they have anything 'proprietary'. When in fact they have several brands in the works with exactly what you speak of. A brand of flower, a specific vape, ect. Like I mentioned, the metrics dont add up to invest a pile of money into a "Spiritleaf" only brand until you have 40+ stores. This came from Darren himself. That being said. Let me make one of the more prolific arguments out there. When my wife goes to do groceries for example (using this as you mentioned grocery stores specifically) She isnt going out to buy 'Yigs' branded steak, shes going out to get the best steak for the best price. Likewise for ANYTHING else purchased. If ISH (having one of the biggest footprints out there) along with a membership value program, can get you the same bud you'd see at Alcanna for example, but at a better price due to buying power, then people will go to your local spiritleaf store to buy it. Simple as that. Your average pothead could care less how fancy the store looks, heck, we've been going to the local trap house for weed for the last 40 years. Also, location is another perfect metric... You think I'm going to drive an extra 20 min to save a few sheckles on a couple of grams? No, im going to go to the store nearest me. With more stores comes more foot traffic.
Then, another thing that "Inner Spirit' has as a pull factor to franchisees, is metrics and analysis. You think a small mom and pop shop know whats selling and what isnt compared to someone with analytics on an entire chain? You have no idea how beneficial that is to a franchise holder. On top of that they help them with small loans to cover inventory untill they're up and running. That was in financials a few quarters ago. There are many benefits to getting into bed with them.
Sure, the lack of volume is an issue, i'll agree with you there. But comparing the SP to that of Alcanna is silly. They have a market cap of around 150m vs. spiritleafs cap of 23m. Who do you think will see a double from an investment perspective first?
And you're comparison to Alcannas 'Nova Cannabis' is simply misleading. Sure they generated that revenue with their brand, but you fail to see that their margins were among the industries lowest at 28.6%. Not only that, but their loss on EPS for the nine months ending was -0.43 per share or 16million. Thats garbage. Or at a more comical approach, a dumpster fire. And this is on top of buying 12 cannabis stores while closing down 17 of their other stores that we're lower margin. Frankly, they're scambling to become a pure-play liquor/cannabis company. I wonder why.
Sure Alcanna can outspend ISH, but they need to be real cognicent of their runway with a burnrate like that.
On top of that, ISH with a low capex model, can continue to expand franchisee stores without needing that 10 million investment, then coming back to dilute shareholders.
With regard to actually diluting shareholders. I'm glad they did, they needed to do so to enter Ontario. And they managed to be one of the few companies that we're able to do this through equity and not debt like everyone else.
All in all its a risk reward play. I'll agree with you, I get annoyed too when people start spouting off about system wide sales, when they cannot be consolidated into ISH, and should quote what Inner spirit is ACTUALLY making. That being said, this is a rather safe approach to retail cannabis, and has a ton of room for upside, while alot of the others will undoubtebly need to dilute to open stores in Ontario. Plus, as mentioned with stats comparable to a mature market, theres a pile of room for more stores. Enough to go around.