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Why Green Thumb Industries Shares Dropped 16.4% This Week

What happened
Green Thumb Industries (OTC: GTBIF), a cannabis consumer-packaged goods company and owner of RISE dispensaries, saw its shares drop 16.4% this week, according to data from S&P Global Market Intelligence.
The stock closed at $14.05 last week, opened at $14 on Monday, and dropped to a 52-week low of $11.52 on Friday before bouncing back a bit later in the day. The stock’s 52-week high is $35.15 and the stock is down more than 44% this year.
Image source: Getty Images.

So what
Green Thumb announced first-quarter earnings after the close of business on Wednesday and investors were not impressed. It wasn’t so much there was bad news, but in the current environment, with the S&P 500 down more than 9% over the past month, investors clearly wanted better news out of Green Thumb and have soured a bit on cannabis stocks in general this year.
The company reported first-quarter revenue of $243 million, up 25% year over year, but flat sequentially. The company had net income of $29 million, or $0.12 in earnings per share (EPS), compared to $22.8 million and $0.10 EPS in the prior quarter. Still, the net income in the quarter represented an increase of 179% year over year and it was the seventh consecutive quarter of positive net income for the company.
The most worrying number in the first-quarter report was that the company’s adjusted earnings before interest, taxation, depreciation, and amortization (EBITDA) fell to $67 million, down 11.8% sequentially and 6% year over year. That’s a sign that increased employee costs and inflation pressures are cutting into profits. The other concerning note is same-store retail sales were down 3% year over year.
Now what
Green Thumb is one of the more successful cannabis companies, one of the few managing a profit. The long-term prognosis for the industry is still bullish and while the current climate has been demoralizing for cannabis investors, Green Thumb is in a relatively strong position in the long term. In the short term, the stock is likely to bounce back from its 52-week low as investors often use that mark as a way to find bargain stocks.
Jim Halley has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Green Thumb Industries. The Motley Fool has a disclosure policy. –

What happened

Green Thumb Industries (OTC: GTBIF), a cannabis consumer-packaged goods company and owner of RISE dispensaries, saw its shares drop 16.4% this week, according to data from S&P Global Market Intelligence.

The stock closed at $14.05 last week, opened at $14 on Monday, and dropped to a 52-week low of $11.52 on Friday before bouncing back a bit later in the day. The stock’s 52-week high is $35.15 and the stock is down more than 44% this year.

Image source: Getty Images.

So what

Green Thumb announced first-quarter earnings after the close of business on Wednesday and investors were not impressed. It wasn’t so much there was bad news, but in the current environment, with the S&P 500 down more than 9% over the past month, investors clearly wanted better news out of Green Thumb and have soured a bit on cannabis stocks in general this year.

The company reported first-quarter revenue of $243 million, up 25% year over year, but flat sequentially. The company had net income of $29 million, or $0.12 in earnings per share (EPS), compared to $22.8 million and $0.10 EPS in the prior quarter. Still, the net income in the quarter represented an increase of 179% year over year and it was the seventh consecutive quarter of positive net income for the company.

The most worrying number in the first-quarter report was that the company’s adjusted earnings before interest, taxation, depreciation, and amortization (EBITDA) fell to $67 million, down 11.8% sequentially and 6% year over year. That’s a sign that increased employee costs and inflation pressures are cutting into profits. The other concerning note is same-store retail sales were down 3% year over year.

Now what

Green Thumb is one of the more successful cannabis companies, one of the few managing a profit. The long-term prognosis for the industry is still bullish and while the current climate has been demoralizing for cannabis investors, Green Thumb is in a relatively strong position in the long term. In the short term, the stock is likely to bounce back from its 52-week low as investors often use that mark as a way to find bargain stocks.

Jim Halley has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Green Thumb Industries. The Motley Fool has a disclosure policy.

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