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Will Q2 Beat Q1 2022? Poll is created on Aug 18, 2022

  
  
  

Are cannabis revenues declining - or, is it a correction?

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D. H. Taylor
(@dhtaylor)
Noble Member Admin
Joined: 2 years ago
Posts: 1053
Topic starter  

Someone just posted an analysis from an article regarding cannabis revenue more likely being in a correction versus a contraction that warrants fear and loathing - I searched for the piece throughout the Forum can't find the reference.  

Nonetheless, this got me asking the basic question: Is cannabis revenue, by and large, declining?  

The above chart shows some interesting things and I thought this merited a quick positing.  

First, there are 104 stocks represented in this - you can see them all in the Complete List of Cannabis Stocks.  All I did was add up the respective revenues for all companies that I follow.  So, far, only 22 of the 104 have printed this quarter (Q2 2022).  And, already these 22 stocks are well above the 50% level.  At this pace, there is a lot of opportunity to eclipse previous levels.  

And... and this is the best part, the peak above is about $2.995B.  Right now, the 22 companies that have reported are sitting about $1.725B.  If the remaining companies that need to report come in at even from the last quarter to this quarter, revenue will print $3.225B.  That is above the previous high by about 8%. Not a bad increase.  And, this squashes opinions that are founded entirely on opinions instead of statistical data.  

As you can see, there was a continuous increase over the past 10 quarters, excepting Q1 2022.  You will recall that Q1 2020 was the pandemic lockdown.  We saw a big move upward in revenue for companies during the lockdown as bars were closed and people were stuck at home.  But, now bars are open.  So, it is reasonable to assume that there will be an adjustment in revenue.  On a run-rate basis, however, it is possible that the adjustment has already occurred.  

Every week I have been adding the new data into the spreadsheet for the complete list of cannabis stocks.  I will keep tabs of this information and keep posting this data.  

In the meantime, will Q2 beat previous?


   
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Q Canna
(@aconceptsketchgmail-com)
Estimable Member
Joined: 2 months ago
Posts: 160
 

 D.H. If  all the new equity research firms putting out guidance have any brains at all , it appears they are all in consensus that metrics are improving nicely. For example they have price targets on AYR ranging from 15 to 40 bucks , basically 2.5 to 5x on most of the bigger MSO's 

Here is the article you mentioned from another co that must of had access behind the paywall that  Headset has  , not sure if everyone knows who they are ? They provide software that produces retail sales and analytics ( the head guy created leafly before selling it)

https://businessofcannabis.com/2022/08/15/headset-arent-concerned-by-apparent-sales-growth-declines/

This link has a Paywall , would love to read the whole article

https://www.headset.io/industry-reports/an-analysis-of-declining-growth-in-recent-us-cannabis-sales


   
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D. H. Taylor
(@dhtaylor)
Noble Member Admin
Joined: 2 years ago
Posts: 1053
Topic starter  

@aconceptsketchgmail-com

Ahhh.... I looked everywhere for this article in the Forum.  Should have known it was you posting this.  And, yes, I think the revenue is looking solid going through this quarter.  I am betting we best Q1 and maybe even Q4.  Maybe.  That would be solid, for sure.  Thanks for reposting this.  


   
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JoeW
 JoeW
(@JoeW)
Active Member
Joined: 1 year ago
Posts: 14
 

Positives working for higher sales:

The California tax decrease

National & state Lower gasoline prices

Inflation is begining to abate.

Continued sales growth through expansion in legal state Cannabis business operations.

A decrease in illegal sales nationwide.

Earlier this year, Pfizer bought a 3+billion dollar Cannabis drug company.

The states are on board. Just congress isn't.

Negatives:

Profits will be lower.

Talking heads have a perceived pro inflation and recession obsession. I believe We are in a stagflation era similar to the 1970s with lots of stock rotation happening. During that time profits flattened for most manufacturing and service businesses. However growth continued and the stronger companies with decent balence sheets excelled and acquired their weaker competitors.

Congress is still jerking around with legalization legislation. It will happen when everyone stops looking for it.

My conclusion is sales will continue to grow, however profitability will be eratic. 

 


   
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D. H. Taylor
(@dhtaylor)
Noble Member Admin
Joined: 2 years ago
Posts: 1053
Topic starter  

Joe... we are definitely seeing high inflation with stagnant income growth.  Mostly, however, the inflation gains are coming in from the broken supply chain.  But, rents will not fall after this unless something drastic occurs with the economy... that sounds painful.  

My thinking on inflation is that the Fed won't have to do too much to get inflation significantly lower.  But, they will have to continually wrench interest rates higher to get that last bit of inflation growth rate down to their 2% target rate... that sounds painful.  

Hopefully, wages can catch up on basic core inflation costs during this time in order to mellow out the effects of increasing interest rates.  

And, we are seeing some decent numbers in the revenue growth for cannabis companies.  Let's see how the cleaning out affects California growers.  I am aware that the smaller players, the vanguards that showed up first and built the industry, are the ones who are going to suffer the biggest losses.  The healthiest will survive.  


   
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