A 60% pullback from record highs affirms Green Organic Dutchman Holdings Ltd (OTCMKTS:TGODF) position in the list of the most bearish stocks in the cannabis space. The stock has continued to edge lower ever since it hit record highs of $6.9 a share.
Green Organic Dutchman Holdings Price Analysis
The stock has since plunged below the IPO price and is currently flirting with record lows. The sell-off wave has come into being on growing concerns about the company’s long-term growth prospects.
Failure of the company to report any sales numbers in the recent week at the back of widening net loss has not boarded well with investors. With the stock currently trading in a steep downtrend, all indication is that it will continue to edge lower.
After the recent plunge lower, the stock faces immediate support at the $2 a share level below which it remains susceptible to further declines. Given the strength of the downtrend as well as the fact that investor’s sentiments have hit all-time lows, The Green Organic Dutchman looks set to continue edging lower.
A closer look at the chart above, it is clear the stock needs to rise above the $3.50 to avert a further slide. Above the $3.50, a crucial resistance level, the stock would be on its way to the $4.50 the next substantial resistance level.
What does The Green Organic Dutchman Do?
The Green Organic Dutchman casts itself as a premium global organic cannabis company focused on Canadian Medical cannabis market. The company grows high-quality organic cannabis with sustainable all natural principles.
The Green Organic Dutchman has continued to hit lower lows on failing to report any sales in the recent quarter. A wider than expected net loss of -$11.3 million for the three months ended September 30, 2014, has not gone well with the market. In addition, the company says it generated a net loss of -$27.1 million for the first nine months of the year.
While the company did not offer any sales numbers for the quarter, the management expects international sales to commence in the fourth quarter, which should pave the way for revenue reporting. Amidst the third quarter underperformance Chief Executive Officer, Brian Athaide remains confident that the company is on track to becoming the largest organic cannons brand in the world.
“We are on schedule to scale up our new facilities to bring the annual capacity of 170,000 organic kegs online. With international sales in Q4 2018, anticipated supply and distribution agreements, domestic sales commencing in Q1 2019, and additional global M&A opportunities, we expect a number of significant catalysts for our Company in the near term,” said Mr. Athaide.
In pursuit of revenues in the fourth quarter, The Green Organic Dutchman has secured a $450 million financing. Part of the funds is to go towards financing current domestic and international plans. According to the Chief Financial Officer, Sean Bovingdon attention shifts towards delivering medical and recreational sales in Canada and Internationally.
The Green Organic Dutchman has already started to negotiate for supply and distribution agreements across Canada as it seeks to generate significant revenues from the growing demand for cannabis products. The company intends to establish national sales networks for targeting both medical and recreational markets in 2019.
The company has already inked a strategic supply partnership with Velvet Management for cannabis sales in and distribution across Canada. With representation in every Canadian province, Velvet provides The Green Organic Dutchman an opportunity to expand its footprint across the country.
“When we began the search for a distribution partner, we wanted the best – a partner with significant distribution capabilities and years of excellence in selling premium alcohol and wine. In Velvet Management we have found that partner,” said President Csaba Reider.
The Green Organic Dutchman has come tumbling down amidst growing concerns about a potential slow growth in the broader cannabis sector. A slowdown in growth, as well as erosion of margins, is the latest headwind dragging the entire sector.
For The Green Organic Dutchman, timing is of great importance when it comes to revenues. Legalization of recreational use in Canada paves the way for the company to post impressive numbers that could help shore the stock’s sentiments in the market.
The fact that the company has started signing sales and distribution agreements indicates how focused on pursuing revenues. The stock should be an exciting pick as a long-term play when it reports its quarterly revenues.
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Disclosure: We have no position in TGODF and have not been compensated for this article.