Record revenues for Q1 explain why DionyMed Brands Inc (OTCMKTS: DYMEF) has started bottoming out after succumbing to bearish pressure in recent weeks. A positive earnings report supported by a bullish outlook is the latest catalyst fuelling the stock’s upward momentum.
DionyMed Brands Price Analysis
In addition to record revenues, expanding gross margins also continues to excite investors. The management touting milestones achieved in the quarter including expansion into Oregon and Massachusetts as well as the prelaunch of the Chill online user experience to drive revenue and margin continues to prop the stock’s sentiments.
DionyMed Brands has also strengthened its brand portfolio with award-winning edibles brands. The multi-state cannabis brands distributor is also fresh from inking an exclusive licensing and distribution agreement with, Défoncé Chocolatier poised to strengthen the revenue base.
The company has also moved to enhance operational infrastructure to support and accelerate growth opportunities in California with the signing of a definitive agreement with Waterside Warehousing.
The stock has since started bottoming out as a flurry of positive developments continues to strengthen its sentiments in the market. Standing in the way of the stock turning bullish in the short term is the $2.07 resistance level.
A rally followed by a close above the $2.07 mark should re-affirm the stock’s breakout credentials setting the stage for it to make a run for the $2.40 mark, the next substantial resistance level. A rally past the $2.40 mark should bring to an end a sell-off wave that had pushed the stock to all-time lows.
Conversely, failure to take out the $2.40 resistance level would leave the stock susceptible to trading in a trend or edging lower in continuation of the long-term bearish trend that began early this year.
What Does DionyMed Brands Do?
DionyMed Brands casts itself as a cannabis brand and distribution platform engaged in the design development and distribution of a portfolio of branded cannabis products. The company sells a wide array of cannabis products including flowers, vape cartridges, concentrates, edibles, confections, and pre-polls.
Why is DionyMed Brands Surging?
Shares of DionyMed Brands are edging higher on the company delivering Q1 financial report that underscores underlying growth. The company says it generated a 155% year over year increase in revenues that came in at $14.2 million. Gross margins expanded to 45% approximately $6.4 million compared to 36% in Q4.
Some of the key milestones achieved in the quarter that underscore underlying growth include Winberry Farms revenues exceeding $1 million. The company also expanded its footprint into Oregon in a bid to supplement operations in California.
DionyMed Brands also inked a strategic manufacturing and distribution partnership with Acres Cannabis. Under the terms of the deal, the company’s products will now be made available in retail dispensaries in Las Vegas Nevada.
The company has also inked a binding term sheet for the acquisition of a 1.83-acre Los Angeles Cannabis campus that also comes with an 80,000 sq. Ft. retail dispensary storefront.
According to Chief Executive Officer, Edward Fields, attention shifts towards scaling the business through focused execution and accretive inorganic growth and infrastructure.
“As favorable direct-to-consumer regulations in California and across the U.S. expand, we look forward to bringing our award-winning brands, market leading ecommerce technology and logistics to consumers throughout California and beyond,” explained Mr. Fields.
DionyMed Brands has since signed an exclusive multi-state distribution and intellectual property licensing agreement with Virginia Kitchen’s Blue Kudu award-winning edibles brand. Under the terms of the agreement, the company is to produce and distribute Blue Kudu products to more than 850 dispensaries across California, Oregon, Nevada, and Massachusetts.
According to the Chief Executive Officer, the agreement demonstrates the power of DYME distribution and expanding the portfolio of promising brands. The signing of the agreement with Défoncé Chocolatier is also set to strengthen the company’s distribution network of a popular line of premium cannabis-infused chocolate products in California.
DionyMed Brands has also inked a C$10 million bought private deal placement on entering into an agreement with a syndicate of investors led by Canaccord Genuity Corp and Cormark Securities. With the new financing, the company remains well positioned to fund initiatives that have the potential to accelerate growth.
DionyMed Brands is set to continue its solid performance as underlying developments continue to strengthen market sentiments. While the stock has taken a significant hit in recent weeks, a medium-term ascending trend line signals that short sellers are slowly pulling out as bulls regain control. The stock looks set to continue climbing as a bounce-back play.
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Disclosure: We have no position in DYMEF and have not been compensated for this article.