Green Growth Brands Inc (OTCMKTS: GGBXF) has shed a significant amount of market value ever since it became clear it would not be able to complete the acquisition of Aphria Inc (NYSE: APHA). A plunge from record highs of $4.5 has since left the stock exposed to a crucial support level, as bears continue to pile pressure.
Green Growth Brands Price Analysis
While the stock has underperformed a great deal in recent months, things could change for the better going forward. The Company delivering impressive financial results is one of the catalysts that could help prop the stock’s market sentiments, consequently fuel a bounce back from current lows.
Operational efficiency, as well as growth in the core business, is another development that continues to affirm the stock’s long-term prospects. Green Growth Brands is fresh from closing a second Nevada Cultivation facility having put the Aphria setback behind it.
The closing of a C$61.2 million financing deal also underscores the fact that institutional investors remain confident about the Company’s growth prospects. Commitment to returning shareholder value through buybacks is another catalyst that could fuel the stock’s price action.
While the stock remains under immense bearish pressure, a bounce back after a steep pullback could be in the offing. The $2.80 is the immediate support level from where the stock is likely to bounce on its way back to the top.
The stock stabilizing above the $2.80 mark should pave the way for bulls to resume control and push the stock higher in continuation of the uptrend. However, failure to stabilize above the support level could result in the stock edging lower probably back to the $2 mark.
What Does Green Growth Brands Do?
Green Growth Brands core business revolves around the cultivation, processing, production, and distribution of cannabis and cannabis-infused products. The company’s product pipeline is made up of cannabis, tetrahydro cannabidiol, cannabidiol, and cannabis-infused consumer products.
Green Growth Brands has moved on from the Aphria acquisition setback. Given that the news is already priced in, it will not come as a surprise on the stock bouncing after a steep correction.
The acquisition of a Nevada cultivation facility operated by Wellness Orchards underscores the push for organic growth. The $13.3 million acquisition takes to two the total number of the Company’s cultivation facilities in the state, expected to enhance production capacity. The new facility should go a long way in enhancing Green Growth Brands retail operation as well as wholesale operations.
Green Growth Brands has also strengthened its balance sheet with the closing of a $61.2 million financing as part of a transaction with strategic investors.
“The capital raised through this offering will help us further drive our rapid expansion. We are a premier operator in two booming markets. In our CBD business, we are rolling out a line of exceptional consumer-focused products including topical and balms, and working with America’s largest developers to increase our network of mall kiosks situated in prime locations,” said Peter Horvath, CEO of Green Growth Brands.
In addition to capital financing, Green Growth Brands has once again underscored its commitment to returning value to shareholders. The Company has completed the repurchase and cancellation of 27.3 million common shares held by GA Opportunities. The transaction should go a long way in reducing stock dilution.
“While we continue to focus on the rapid expansion of GGB, the opportunity to repurchase these shares well below the current market price immediately and directly increased shareholder value,” said Mr. Horvath.
The dust on Aphria transaction has settled down, and Green Growth Brands has bounced off nicely. The acquisition of a second Nevada processing facility underscores the fact that the company has already moved on and is now focused on organic growth.
Supported by a solid balance sheet, Green Growth Brands should be able to pursue strategic initiatives in a bid to accelerate core business growth. After coming under immense pressure in recent weeks, the stock could as well be on its way up, after the correction phase.
The unveiling of solid financial results for the third quarter fiscal 2019 is one of the catalysts that could prop the stock’s market sentiments and consequently fuel a rally from current lows.
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Disclosure: We have no position in GGBXF or APHA and have not been compensated for this article.