As many of us know, we have a very active Sunniva chat group on Discord. It's still early and we still need to process the modified strategy and hear from management about it, but the people in the group are very close watchers of the company and I thought it could be interesting to make a little compilation of some of the best comments so far. Instead of just blurting out random insults and arguing about who's brain dead (in true Stockhouse fashion)
scopro: With clarity on how things are done in Canada, with little to no dilution, and mitigated risk (regarding any fear of oversupply), I see a clearer path to profitability. Measured, prudent and REAL. No more speculating! Bringing modules in on demand is the answer for Canada to get going! Screw the loans! We don't need them! We have a high margin market of 105,000 patients! Complete vertical! To anyone pissed at the news today, youre in the wrong stock. Management is into building a sustainable business and preserving shareholder value. If BS pumping is your thing maybe you should consider some penny stock with hundreds of millions of shares. The cannabis investor market is becoming ever increasingly more intelligent and realistic versus a cesspool of speculatory BS that was present years ago, and as time moves forward, Sunniva will continue to gain more respect. Sub 50 million shares, 325,000 sq ft getting ready to start spraying it all over the place, Canada getting a licence, ladies and gentlemen, start your engines.
I agree that 5000kg yield (initial! full 2019 yield for Canada unknown at this point, will go by demand of NHS patients and maybe other purchasers) at high margin and no debt is by far a better starter strategy than either big time dilution or taking on $100+ million in debt at mainly wholesale prices in a questionable market. What if there was 20,000 kg in flower and oil gone to waste? It wouldnt be good for margin. When valuing a company, margin is more important than gross revenue. Much has changed already in the cannabis space and it will continue to evolve. The new strategy will give management more flexibility to adapt to any further changes. Im guessing the door will still be open for a JV or loan but today they showed they dont need it. Judging by the latest photos in Cali I suspected first harvest to go into Q2. Big effin deal. Oh boo hoo, our 60,000kg/year is delayed a few weeks. Ffs. Anyone crying over the news today, its time to toss the pull-ups and put on the big boy/girl pants. Id rather share this company with investors anyway, not cry baby day/week/month traders.
money (also crunched the numbers and made a very interesting separate analysis):
This is a really good update. they just didn't f***ing say how and why it was good. Assuming proper execution of the operational plan given by sunniva as part of Q3 update, I think we can conservatively expect canada + USA to generate $45MM. given the strong growth prospects for the company and the low market cap, I still see this as being significantly undervalued and a great buy at these prices. I feel like we're all being the asian parent meme. "you build largest facility in US? why not largest facility in the world?"
Pencilsmasher:
Maybe I'm dumb but I still see a company adding strength with aquisitions and new team members that's going to be growing at low cost at scale. I can't bring myself to care about a million here it there at this stage. It's peanuts compared to what's coming. I've been nervous and unsure for a lot of the year but I like what I'm seeing. If you look at the stock performance of Tony's companies in the past its low low low low low great unbelievable.
DeltaHedge:
I hope everyone in here can take a deep breath tonight, listen to the call tomorrow, and don’t do anything emotional. There’s a ton of good things in the pipeline in the USA like banking reform, the states act, the farm bill, a potentially strong market for the next 3 months, supporting our stock doing well as Cali comes online in weeks. If we ascribe zero value to Canada it’s still a 20$ stock once ramped.
sammy:
Screw canopy, they weren't going to pay premium, medical pays a lot more.
Nukes2:
Canada is a s**t show in general right now. They will build organically via high margin medical and at a slow pace. Yes the construction is taking longer than projected, always does. As long as they get it right, there is no do over. I have actually been involved with a number of advanced aerospace cells, and the bean counters are always over optimistic in terms of timelines, but you can't sacrifice quality over expediting. These guys are building a long term viable business, it will be a year from IPO come January, quicker than any of the major Canadian LP startups.
It was a risk to build out the complete facility until. It is clear they have a market for their product. For now, grow for NHS, guaranteed high margin clients. Secure further contracts then build for that. Canopy is obviously focused on other markets now in terms of getting additional supply. If it was my money, I would go where the guaranteed business is. heir strategy has obviously changed and Sunniva is adapting to the changing market. Canada has not gone well so far, so slow down take advantage of California situational advantage and capitalize. This will ensure survival and our investment. All the money put into Canada so far is not wasted and will be part of any strategy. Incremental development going forward is prudent but painful. Canada is a follow on play to California, so adapting to the problems arising in Canada and being there in 2020, 2021 is fine by me.
The cold truth is management keeps missing promise dates and typically I would have bailed out for that reason. But Barker Pacific, Holler, Pederson, et al have a lot of skin in the game and are batting for themselves. The SP is immaterial for them right now. I am staying because emotion is irrelevant and I plan to make a million dollars from their million dollar plans.
Leaf:
Those who have been critical appear to be driven by emotion and short term thinking. I agree that some aspects of the release are disappointing (e.g. down-listing, further delays and missed timelines, sudden shift in strategy, etc, etc). But I don't believe management to be disingenuous, myopic or incompetent. That's what will keep me patient.
As stated over and over by many, the potential upside here is obvious even on a very conservative estimate of revenues in Cali. I'm not a professional analysts or anything close, but I believe the risk/reward here is still very appealing. Will consider adding more in the coming days/weeks/months if we continue dropping on overly negative sentiment.
BudapestJackson: A company's strategic vision is rarely in line with short term investors. As a long term investor in Sunniva, I am quite happy about their Canadian pivot. In the long run, Canada will be over-regulated, oversupplied, and overhyped. The Canopy deal is a two year plan to help Canopy bridge the near term supply gap until their investments abroad come on line. As a Canadian wholesaler, Sunniva would operate in a world of diminishing returns. Their new plan is far more focused, non dilutive, and profitable. California has always been the big prize and now they are focusing on capturing retail margin on top of cultivation, extraction, and distribution This is why the U.S. offers a far better playing field than the highly regulated and fragmented Canadian one. Sunniva will have the opportunity to be a multi sate operator in the future as well in the U.S. The party is just getting started and I would much rather own a company with short term pressure and bright long term prospects than one that massages quarterly reports on the path to bankruptcy. Just because they did not announce a loan does not necessarily mean they were not offered one.
Leith SlowedNotStalledensen:
When a change of strategy is announced, especially when coupled with decreased revenues, especially after the stock has gone done for so long, it's normal for people to be apprehensive and have a negative first reaction. But the shift in focus is 100% the logical, safe way to play this, and I think we should all be happy that Sunniva Canada is ready to move forward right away without significant risks being taken -sizable debt, without irrevocably exposing ourselves to the uncertainties of Canada's future market. And the market cap is already so, so low. Any progress, of any form, should be a net positive for the stock. It's not like we are at some kind of baseline price now. The price before Canopy was $12. It's $4 at the moment with no regards to of all of the very real and tangible progress the company made over the past year. If we could view this rationally and not as investors whose bank accounts are on fire, I think we should be able to see that Sunniva is making all the right moves within the realm of what's possible, irrespective of our fantasies. I also like the detailed breakdown regarding the spin out. After it takes place it will be a lot easier for the company to get financing in Canada at much more favorable terms than anything they could get now with all of the uncertainty in the current market environment even if we leave aside the question of US federal illegality.
NoMansGhost: For those concerned about Sunniva having to do another bought deal due to lack of cash, we currently have $11.2M. Q2’s net loss was 6.8M or $2.26M a month. At this rate, Sunniva has enough cash to sustain loss for 5 months. 5 months from now is May. We have a lot of revenue streams coming online in Q1 including the sale of our own branded products.
Pending an unforeseen acquisition that would require a large sum of money, there is currently no need for a bought deal, and theoretically we will not be strapped for cash until April-May, by which point we should already have our revenue streams flowing and a good deal of money coming in.
And based on this statement from the press release, I assume there will be no more US related acquisitions in the immediate future - “With our strategic assets in place in California, we are now in a position to accelerate our revenue growth...”
I like this - “Concurrently, Sunniva is purchasing a 4,200 sq. ft warehouse in Long Beach, California that, once licensed and operational, will serve as an additional distribution hub for Sunniva and will expand the Company’s distribution reach from the southern border to San Francisco. The City of Long Beach is a cannabis friendly region and the warehouse is situated in an industrial district that has been zoned for cannabis business operations. Renovations and receipt of licensing requirements are expected to be completed in Q2 2019.”
“Construction is nearing completion for Phase 1 of the Sunniva California Campus and is expected to be completed in Q1 2019.”
- Great news if true. If we can have our 50,000 KG phase 1 complete by the end of March, that would be huge for 2019. I was thinking It wouldn’t be finished until June. Keep in mind, Sunniva isn’t the best with these timelines
“the Sunniva California Campus is expected to deliver a continuous daily harvest of approximately 210 kg (2.1 million grams) of dried flower”
- That’s roughly 6,000kg a month, or potentially $6M in profit a month, revenues greater than $25M a month or $75M a quarter if sold at $4 a gram. One month could produce a $2.40 US share price alone at 50M outstanding shares. Meaning we only need a month and a half of full capacity production to justify the current share price.
If anybody wants to join the ongoing conversation over at Discord, here's the link: