General Cannabis Corp (OTCMKTS:CANN) finds itself in a precarious position as it continues to trade in a tight range after imploding from record highs of $11. Concerns as to how the company plans to achieve sustainable profitability as well as rising operating expenditure have all but continued to deal the stock a big blow in the market.
General Cannabis Price Analysis
It’s been a rough year for General Cannabis as the stock has struggled to break out of the $2 to $4 a share trading range. The big question remains, does General Cannabis have what it takes to finish the year on a high?
Well, the stock has every reason to bounce back after the recent underperformance. The company boasts of multiple subsidiaries that allow it to target diverse niche markets in the cannabis sector. Revenue growth in recent quarters also attests to the company’s growth phase that points to a bright future.
The overall cannabis sector turning green in recent months has also reaffirmed confidence that General Cannabis will also bounce back from current lows. That said, the stock faces strong resistance at the $4 a share level on any movements on the upside.
A rally followed by a form of stability above the critical resistance level should open the door for bulls to push the stock the $6 a share handle, seen as the next substantial resistance level. On the downside, General Cannabis faces immediate support at the $2 a share level. A breach of the critical support level could open the door for short sellers to push the stock lower, on the continuation of the long-term downtrend.
What Does General Cannabis Do?
General Cannabis is a comprehensive resource provider and provides consultation services in the regulated cannabis sector. The Company is a trusted partner when it comes to cultivation, production, and sales in the cannabis sector.
The company operates through four segments of Security & Cash Transpiration Services, Marketing Consulting, and Apparel marketing as well as operations Consulting and Products and Finance and Real estate Finance.
East Coast Expansion
As the stock has continued to underperform, General Cannabis has continued to strengthen its growth prospects in the multi-billion cannabis sector. For starters, the company has expanded its presence on the East Coast with the opening of a New York Office.
With the new office, the company remains well positioned to target existing and new clients looking to venture into the cannabis business. The company is also planning to use the new office to attract top talent as well as partnerships for strengthening its prospects in the sector.
According to Executive Chairman Michael Feinsod, they will use the new office to expand and enhance the company’s corporate, marketing mergers & acquisitions teams.
“The growth potential for the market in this region is unparalleled. An East Coast office is perfectly suited to cater to this territory as General Cannabis continues to expand its presence nationwide. We plan on expanding our security, operations and marketing segments aggressively throughout the East Coast,” said Mr. Feinsod.
Robust Revenue Growth
Expansion into the East Coast could not have come at a better time. The expansion provides a pathway for the company to strengthen its business empire further in pursuit of new streams of revenue.
The company is fresh from reporting a 34% increase in revenues for the three months ended June 30, that came in at $1.2 million. Revenue for the first six months of the year was also up by 32% to $2.1 million as the company continued to enjoy a trajectory of robust growth.
However, at the backdrop of robust revenue growth, General Cannabis has experienced a significant increase in net loss. The increase can in one way be attributed to an increase in operating expenses as the company continues to spend more money to strengthen its business empire in the cannabis sector.
There is no doubt that General cannabis has underperformed for the better part of the year given its potential. While an increase in net loss is a point of concern, robust revenue growth is a testament that the company is spending more money to strengthen its streams of revenue in pursuit of long-term value.
The recent dip in value in our view presents an opportunity to buy a stock with huge prospects on the low. There is no doubt that General Cannabis will bounce back from the current lows given the underlying solid fundamentals depicted by robust revenue growth.
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Disclosure: We have no position in CANN and have not been compensated for this article.