Article14 Investors: MedMen's Disappointing Q4 Spells Hard Times Ahead
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Investors are forecasting tough times for Los Angeles-based cannabis retailer MedMen
Enterprises Inc. following a disappointing 4th quarter report.
Just hours after posting their 4th quarter results on October 15th, Canadian
broker-dealer Canaccord Genuity downgraded MedMen’s 12-month price target to $0.00
and doubled down on their previous recommendation to sell-and-sail.
Earlier that day, MedMen reported Q4 earnings of $27.5 million, a 40.3% decrease from the previous quarter. The company cited lower foot traffic in its key markets of California and Nevada as the main reason for the low revenue.
“We made significant progress during the fourth quarter by focusing on retail profitability, optimizing our corporate infrastructure and strengthening our balance sheet ahead of an exciting new chapter for the Company,” the company's Interim CEO Tom Lynch said in a prepared statement. The company says it expects to bounce back to the tune of a 37% increase in Q1 2021, however Canadian investors remain wary.
Stock analysts Technical420 say it expects further dilution in the short term; it suggests the company’s $10 million cash-on-hand at the end of Q4 leaves them little bandwidth for mistakes. (In August, the company was denied a permit to sell recreational cannabis in the city of Pasadena.)
It remains to be seen how economic recovery will play into MedMen’s opportunities to correct course going forward.
Many U.S. cannabis companies have seen their Canadian stock valuations decrease from their 2019 highs and economic hardship resulting from the Coronavirus pandemic has also impacted opportunities for capital.