RE:RE:RE:a question The following is just my opinion, I don't have any insider knowledge at all.
When I evaluate LABS, I think they are losing their sp value for more than just poor financial performance over the last few quarters. I think the larger investors do not beleive in the business model anymore.
Originally, LABS set up as the the first extraction company in the first western legal nation for Cannabis. They had first mover benefit. They were able to extract oil much more efficiently than the larger LPs and they signed long term contracts with the big players (Valens followed suit).
What I Beleive LABS did not take into account was two things: 1) how much price compression would occur, and 2) that the larger LPs Vertical Intergration Model would fail.
The result was that LABS cannot make money at current prices. There is still demand for oil, but Labs can't play at these prices. Not many extraction companies can. Some other extraction companies (Nextleaf) claim that they can - but time will show.
Also, they were relying on the larger LPs signing continued long term guaranteed contracts. These LPs are trying to exit VI and downsize operations. Therefore - the contracts dried up because their customers couldn't afford to operate at that size- amd even if they could - the going rate for toll extraction has dropped dramatically.
The hope of investors saying to hold on because contracts are on the way in 2021 gives me pause. Won't the same thing occur in Australia and other locations?
Valens has pivoted into contract manufacturing and is using their extraction expertise and equipment to shift into being a white label CPG provider. LABS could look to do the same. It's tricky though because CPG is not their bread and butter knowledge base. I hope they are able to make a change.