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Valens Company Inc (The) Ordinary Shares VLNCF

The Valens Co Inc is a developer and manufacturer of cannabinoid-based products. The company's extraction methods are CO2, ethanol, hydrocarbon, solvent-less, and terpene extraction. Its products are Tinctures, Capsules, Beverages, and Vape cartridges among others. Its reportable segments are Cannabis operations, Analytical testing, and Corporate. The company has a business presence in Canada and other countries, and it generates a majority of revenue from the Cannabis operations segment.


OTCQX:VLNCF - Post by User

Comment by Capharnaumon Apr 14, 2022 11:28am
134 Views
Post# 34603897

RE:One analyst has target of $9.50

RE:One analyst has target of $9.50
88guy88 wrote: with profitablity of the company by year end.....that would be nice!....we will see how they manage the company.....the pressure is on them for sure with the last financing at $2.65.....they can see the writing on the wall.....just like any other company.....produce results or you will be shown the door......


It's going to be tough to get even to EBITDA positive territory. Even if they get back to Q4 2021's gross profit margin (34.1%), they would need to increase quarterly revenues to close to $60MM to just become EBITDA neutral. Even at that point, they'd still be cashflow negative, and that is without any increase to sales and marketing (which is unlikely, since the increase in sales would likely mean more comissions paid and advertising in the USA).

Using a gross profit margin of 20%, without any increase to sales and marketing, they would need to get to net revenue of $100MM to get EBITDA neutral. If they cut corporate costs by $5M and keep sales and marketing costs steady, then they need to reach $75MM in net revenue.

At gross profit margin of 20%, to reach their 2023 guidance of 10% EBITDA margin, they would need to cut off over $20M in costs per quarter.

It's going to be hard to achieve.
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