The last two months have seen the share price of GrowLife Inc (OTCMKTS:PHOT) rise by over 100%.
The stock, which was trading at about $.005 back in October has since risen to trade at its present price of $.0168, a significant surge in its share price to date. This has been coupled with a commensurate rise in the traded volumes which currently stand at an average of about 40 million shares over that same period.
All the above price action can be seen in the chart below:
The price hike above is also an increase from November’s price of $.0112 which by then was a significant high from its trading averages. During this period, the company had made various changes to its management and operating activities. In the course of that article which can be accessed here, we alluded to the fact that something was in the works and that their share price was expected to further rise going into the future.
Our theory has been proved to be true. As such, we have taken time again to assess the company’s current situation and how their recent developments will affect their value addition narrative going into the future.
Summary of PHOT
Before going into the intricacies, however, let us first have a brief look at the company’s history.
GrowLife was formed in 2012 and incorporated in Kirkland, Washington. The goal of the company is to become the country’s largest cultivation service provider. This is achieved through ensuring that their customers are the most successful in the industry through a network of local representatives covering the USA and Canada.
Currently, PHOT provides cultivation services for organics, herbs and greens and plant-based medicines.
Since our last analysis of PHOT, a lot has been announced pertaining their products and new ventures that they are working towards ensuring they take advantage of.
First, the company recently launched a new soil type dubbed GrowLife HP Organic Soil. The soil, High-Porosity Organic Peat, is a highly oxygenated soil allowing it to dry out faster and more evenly then heavier soil mixes. This ensures individuals can water their plants more often so as to ensure that higher yields can be obtained. This high porosity is an ideal fit for commercial cultivation as it ensures that individuals do not overwater their plants thus allowing the best control of both the plants and yields.
This soil came at the opportune moment when the company is working at venturing into the cannabis industry. The company is currently targeting cannabis players as well as ensuring they have the highest quality as they work at venturing into it themselves.
Speaking during the launch, their CEOMarco Hegyi said:
“GrowLife remains focused on delivering the healthiest and highest quality products to customers. As the price of cannabis declines to serve the greatly expanding legal market, quality must be maintained while we help our customers lower their production cost,”
With this in mind, it came as no surprise when the company decided they would venture fully into the Canadian cannabis space.
PHOT, towards the end of November, announced that they had opened a retail outlet for the sale of cannabis located at Calgary, Alberta, Canada. The decision which was informed by the increased hype caused by the expected legalization of cannabis in Canada coupled with the valuation of the market which stands at between $4.9 billion and $8.7 billion according to Deloitte.
The companyis therefore expected to reap them significant benefits next year when this is actually enforced.
In this expansionary move, the company will not only continue to put up shop but also ensure that there are staff and experts in these facilities who will educate customers on efficient growing and cultivation practices. The latter is meant to ensure that GrowLife meets its motto of helping their customers become successful.
Finally, the company launched a new all-in-one home cultivation system dubbed GrowLife Cube Pro which adds to their already large inventory of products. The system which is an improvement to the GrowLife Cube comes to fill the demand for home-based cultivation which has been driven by regulation in some states. Furthermore, with more people wanting to cultivate some of their crops at home, and the inclusion of marijuana to this list, the system will drive them into a new market (home-grown cannabis) which has been valued at $7 billion in California alone.
All in all, PHOT has made headway in quite a number of projects and if the trend is anything to go by, the company is continuously going to grow long into the future.
The company experienced increased revenues in the third quarter of 2017 with their revenues rising from $521,000 in 2Q2017 to $661,000 in 3Q2017.
However, this is all the positive that was. Their net loss fell to over $756,000 from a loss of $247,000. Furthermore, their working capital position and operating cash flows also stood at a deficit of $2.87 million and $227,000 respectively in 3Q2017.
Upon this backdrop, it would be important that more stringent financial management practices are taken up to ensure that this firm’s strong vision is backed by a commensurate financial position. However, if the increase in revenues is anything to go by, there is hope for PHOT.
PHOT has worked to ensure that they continue to grow and most of this is paying off. With their vision and strategic focus, there is a lot to be hopeful about in terms of growth. We remain bullish about PHOT.
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Disclosure: We have no position in PHOT and have not been compensated for this article.