Quick Summary
Biggest MJ e-commerce, expanding rapidly, US expansion, low valuation.
High Tide is also generally grouped in with the Canadian Licensed Producers and High Tide is not an LP. They are an e-commerce and retail cannabis beast with multiple brands. Also a differentiator is that High Tide is already cash flow positive.
About the company
High Tide is a Cannabis Retailer in the Canadian MJ space. They have the #1 and #2 MJ accessory e-commerce sites https://grasscity.com/ and https://www.smokecartel.com/. In addition to these industry leading MJ accessory e-commerce sites they also own industry leading e-commerce sites for CBD as well including US based https://cbdcity.com/, and https://fabcbd.com/. In Canada currently they have 87 retail locations in Canada that sell MJ and MJ accessories and plan to have 115 by the end of the year. Their retail store brands include Canna Cabana, Meta, NewLeaf, and KushBar.
Wholesaling. Yes, High Tide also wholesales their advanced MJ accessories to US locations as well. These brands include Valiant Distributions https://www.valiantdist.com/ and Famous Brandz https://famousbrandz.com/which has partnerships with Snoop Dogg, Trailer Park Boys and many other celebrities.
Now that you know a little about the company, let's get into some numbers.
Revenue, growth, profitability and valuation
With 38.32M in revenue last quarter, High Tide grew 179% in revenue YoY and 42.82% QoQ. They have been boasting consistent high growth for the past two years and imo will be a big winner in the MJ space. They currently trade at a 2.5 forward P/S (200M estimated revenue for 2021), which is extremely low for a company that is growing so quickly. Now you might think that while in this growth phase they would not be profitable, not true. The company has been EBITDA and cash flow positive for the past 4 quarters and trades at a price/ebitda ratio of 38.9, which again is extremely low for a company growing so quickly and in the MJ space.
Management team
Raj Grover is our CEO and leader and the man is an absolute beast. Raj currently owns ~20% of High Tide shares and has never sold a single share. Raj started High Tide in 2009 with 40k and has since then grown it into a profitable company with hundreds of millions in revenue.
Industry comparisons
Sundial Valuation Comparison: Let's compare this with some other Canadian MJ companies that are also on the NASDAQ. Sundial currently has a market cap of 1.97B, about 5x the market cap of High Tide. You would think they have better growth, more revenue, higher profitability right? Incorrect, the company only has $51.47M in revenue over the last 4 quarters and -$72.41M in EBITDA. Yes, you read that correctly negative $72.41 million in EBITDA.
Now, lets check High Tides number over the last 4 quarters. They achieved $107.92M in revenue over the last 4 quarters with a positive EBITDA of $12.86M. More than double the revenue of Sundial and infinitely higher than their EBITDA. Now let's look at the growth of these two companies. High Tide over the last 4 quarters grew, QoQ 43.29%, 18.56%, 15.63% and 42.82% with 19.57M, 23.2M, 26.83M, 38.32M in revenues perspectively. Sundial grew revenues -14.90%, -33.76%, 10.11%, -26.52% with 17.59M, 11.64M, 12.82M and 9.42M in revenues perspectively. Can you see the difference? High Tide has consistent massive growth QoQ, while Sundial has only grown revenues 1 out of the past 4 quarters.
Conclusion.
High Tide is a clear winner in the MJ space with their e-commerce selling worldwide to US, Canada, and Europe. We are literally the Amazon of the MJ space. Our amazing leader Raj who has built this profitable, high-growth empire. Also, we are extremely undervalued, by traditional methods or by industry comparisons. All I have to say is The Tide is High.
PS
All numbers are in Canadian Dollars as Sundial and High Tide are both Canadian companies.
References
High Tide Investor Presentation
https://hightideinc.com/wp-content/uploads/2021/06/High-Tide-Investor-Presentation-June-1-2021.pdf
QoQ growth numbers High Tide in $ CAD
https://www.marketwatch.com/investing/Stock/hiti/financials/income/quarter?countrycode=CA
QoQ growth numbers for Sundial in $ USD
https://www.marketwatch.com/investing/Stock/sndl/financials/income/quarter
High Tide brand list
https://hightideinc.com/brands/
High Tide Q1
https://hightideinc.com/wp-content/uploads/2021/03/HT-1Q21-Financial-Package.pdf
High Tide Twitter
https://twitter.com/HighTide_HITI
High Tide Youtube Channel
https://www.youtube.com/channel/UCFFm1T91bZ2WUz5JYB4vPlg
Raj Grover (CEO) Twitter
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