Canadian Cannabis Licensed Producers See Benefits of Big Board U.S. Listings
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NEW YORK, June 10, 2019 /PRNewswire/ -- Another Canadian licensed pot producer just entered the fray on a major U.S. exchange, as OrganiGram Holdings Inc. (NASDAQ:OGI) (TSX-V:OGI) began trading on the Nasdaq. Opening at a price of approximately $8, the under-the-radar LP joined the ranks of other large Canadian players getting uplisted to a U.S big board.
When it first announced the uplisting back in late April, OrganiGram Holdings Inc. stock was trading near $6.50—having more than doubled the low prices witnessed back in December. Now the LP has joined Tilray Inc. (NASDAQ:TLRY), Cronos Group Inc. (NASDAQ:CRON) (TSX:CRON), Village Farms International, Inc. (NASDAQ:VFF) (TSX:VFF), and recently-IPO'd Greenlane Holdings, Inc. (NASDAQ:GNLN), on the NASDAQ, and looking to reap the benefits of such exposure.
With a market cap of approximately $1.3 billion, OrganiGram Holdings Inc. (NASDAQ:OGI) (TSX.V:OGI) won't be the largest or smallest LP stock by market capitalization on the Nasdaq—that would be Cronos (~ $5.423 billion[1]) and Village Farms (~$652.265 million[2]).
While some of the larger players have struggled to increase their valuations on big boards such as the Nasdaq and the NYSE, the mid-tier players have seen more successes.
Take, for instance, Village Farms International, Inc. which was the most recent Canadian LP to receive an uplisting to the Nasdaq back on February 21, 2019. Starting at a price of $9.85 on its first day, Village Farms saw its stock hit a high $17.45 exactly one month later, and now trades at more than 33% higher than it did on day one.[3]
Both Tilray Inc. and Greenlane Holdings, Inc. IPO'd on the Nasdaq, whereas Cronos, Village Farms, and now OrganiGram, went through the uplisting process from the OTC board.
Listing on a major U.S exchange typically helps a company due to improved visibility, validity, and liquidity. Typically trading volume picks up significantly, the bid-ask spread tightens, and potentially the volatility often associated with OTC-listed pot stocks can decrease.
OrganiGram Holdings Inc. (OGI) becomes the latest to receive approval from the same exchange that has companies like Apple Inc., Microsoft Corporation and Tesla, Inc. among others.
Already, the stock has seen a noticeable increase in volume, trading no lower than 2 million shares per day since the two days in the lead-up to the uplisting.[4] In comparison, the only other time the stock traded more than 2 million or more shares in one day in 2019 was April 30th—the day after the Nasdaq announcement was made.[5]
Nasdaq Approval Driving Further Evidence of Momentum
Prior to its approval, OrganiGram Holdings Inc. (OGI) had already made a very strong case for investors. Posting very strong Q2 2019 results recently for the quarter ended February 28th, the LP posted revenues of C$26.9 million that doubled the prior quarter[6].
OrganiGram is one of only four companies with distribution arrangements in all 10 Canadian provinces—a distinction only heavyweights Canopy Growth Corp., CannTrust and Aphria also share.
During Q2 2019, OrganiGram generated an impressive adjusted gross margin* of C$16 million or 60% and adjusted EBITDA* of C$13.3 million for a margin of 49%. It was able to keep its cultivation costs per gram under $1—at a low cash cost of C0.65/gram*, and all-in cost of C$0.85/gram of dried flower harvested, both of which are the lowest among Canadian publicly reporting LPs.[7]
It has largely achieved this through the implementation of state of the art technology and proprietary software that has helped increase yields. In particular, OrganiGram has a 3-tier indoor cultivation technology, effectively maximizing the facility's available cultivation space, and controlling critical facets of the growing environment (light, temperature, humidity) contributing to lower growing costs and higher margins.
Gaining a boost from the Nasdaq filing is one thing, but OrganiGram also has a track record of meeting its targets which reflects s its focus on execution and driving shareholder value.
The company is on track to complete construction of its Phase 4 expansion for target annual production capacity of 113,000 kilograms* by its target date - the end of 2019[8]. In addition to the expansion, OrganiGram Holdings Inc. (NASDAQ:OGI) (TSX.V:OGI) is also refurbishing 56,000 square feet for its own edibles facilitys and additional extraction capacity in preparation for the Canadian legalization of edibles and derivative products, expected this fall. As the company readies itself to demonstrate a leadership position in this new edibles and derivatives market, it announced a C$15 million investment commitment in a high-speed, high-capacity, fully-automated production line with the ability to produce an estimated 4 million kilograms of exceptional chocolate cannabis edibles per year. Organigram expects to take delivery of the line in the fall.[9]
The company is further diversifying its portfolio with innovative partnerships in a bid to uphold its commitment to a leadership position with next-generation cannabis products. OrganiGram Holdings Inc. (OGI) has been selected as one of the four Canadian launch partners of PAX Era, the premium oil vaporizer created by PAX Labs, Inc., a leading consumer technology brand in the design and development of premium vapes for dry flower and concentrates.[10] Organigram plans to offer Edison Cannabis Co. brand PAX Era pods coast to coast in Canada through its distribution arrangements in all 10 provinces.
These announcements are just the beginning of Organigram's strategy to capture the next growth opportunity in the two largest segments of the edibles and derivative products market (based on US sales) with the company's commitment to technology-driven innovation. Estimates suggest vape pens alone currently represent the largest segment at approximately 25% of US sales based on form factor.[11]
Additional LP Nasdaq Experiences
Nanaimo, BC-based Tilray Inc. (NASDAQ:TLRY) made a splash when it became the Nasdaq's first pot IPO, back in July of 2018[12]. Within the first three months of trading, the stock took off to its historic high in October 2018, topping $170 in its share price[13]. The company has since come back down to earth but is still currently trading at more than 90% higher than its IPO price[14].
The most recent Nasdaq IPO comes from Greenlane Holdings, Inc. (NASDAQ:GNLN), which is still just a bit more than a month old on the exchange.[15] Still too new to assess on a long view, the honeymoon period has seemingly worn off, as its first day trading volume was over 7 million, whereas the company hasn't traded more than 1 million in a day since May 6th, and is trading at roughly 53% of its opening IPO price of $29[16].
Toronto-based Cronos Group Inc. (NASDAQ:CRON) (TSX:CRON) was the first big splash on the Nasdaq from the sector, arriving on the scene in late February 2018[17]. With its frequent 8-digit (sometimes 9-digit) trading volumes and over $5 billion market cap, Cronos is far and away from the largest LP by market cap on this exchange. Since trading on the Nasdaq, the company has gone from trading at $8.24 to a high of $21.92 almost exactly a year later[18]. Currently, Cronos is trading above $15.50, at nearly a 90% increase since day one on the exchange[19].
Since receiving its uplisting in February of this year[20], Village Farms International, Inc. (NASDAQ:VFF) (TSX:VFF) has comfortably risen in value by roughly 33%. Within its first month on the exchange, the company hit its high of $17.45, before falling back to earth, rising back to $16 in April, and now settling in at its current $13.21 price point[21]. Year-to-date, 2019 has been a remarkable story for Village Farms, which is now more than triple its open price on at the beginning of January 2019[22]. The positive momentum of the company's stock chart can be visibly seen beginning around the January 21, 2019 announcement of the application to get on the Nasdaq big board[23].
For a free research report on Organigram Holdings Inc. (NASDAQ:OGI) (TSX.V:OGI), visit www.potstocknews.com
DISCLOSURE: This article contains certain non-IFRS performance measures of Organigram Holdings Inc. including cash and all-in cost of cultivation per gram, net revenue, adjusted EBITDA, and adjusted gross margin which are not calculated in accordance with IFRS and may not be comparable to similar data presented by other companies. Please see the company's Q2 2019 MD&A.
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[1] https://ca.finance.yahoo.com/quote/CRON?p=CRON&.tsrc=fin-srch
[2] https://ca.finance.yahoo.com/quote/VFF?p=VFF&.tsrc=fin-srch
[3] https://ca.finance.yahoo.com/quote/VFF/chart?p=VFF#
[4] https://ca.finance.yahoo.com/quote/OGI/history?p=OGI
[5] https://ca.finance.yahoo.com/quote/OGI.V/history?p=OGI.V&.tsrc=fin-srch
[8] https://www.organigram.ca/assets/Investor-Deck/investor-presentation.pdf?v=78043
[9] https://www.organigram.ca/assets/Investor-Deck/investor-presentation.pdf?v=78043
[10] https://www.organigram.ca/latest/organigram-secures-partnership-with-pax-as-brand-partner/
[13] SEE PRICE FOR Oct. 16, 2018: https://ca.finance.yahoo.com/quote/TLRY/history?period1=1538377200&period2=1540969200&interval=1d&filter=history&frequency=1d
[14] https://ca.finance.yahoo.com/quote/TLRY/history?p=TLRY
[16] https://ca.finance.yahoo.com/quote/GNLN/history?p=GNLN&.tsrc=fin-srch
[18] https://ca.finance.yahoo.com/quote/CRON/history?p=CRON
[19] https://ca.finance.yahoo.com/quote/CRON/history?p=CRON
[21] https://ca.finance.yahoo.com/quote/VFF/history?p=VFF&.tsrc=fin-srch
[22] https://ca.finance.yahoo.com/quote/VFF/history?p=VFF&.tsrc=fin-srch
[23] https://ca.finance.yahoo.com/quote/VFF/history?p=VFF&.tsrc=fin-srch
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