Individual investors often face a lot of pressure to let go of some stocks which behave like Plus Products Inc (OTCMKTS: PLPRF). The stock looks like it is struggling to shake off the bears who set in around the middle of March. The company is developing a range of products which should allow it to overcome its struggle with short-sellers.
Plus Products Share Price Analysis
In our last update on PLPRF, we noted that the massive decline of the share price from record highs was giving out all the wrong signals to investors. As such, a spooked market was finding no inspiration to snap up Plus Products’ stock. We also predicted that the stock would plunge back to $3 levels if the critical support level at $3.60 would be breached.
Since our last update, the stock has breached the support level three times and at each of that episode, the threat of the stock sinking further has been real. The most recent slide happened between May 21 and May 29 after the stock pared 8.98% of the gains it had made to settle at $3.34. Also, we predicted a spike in upside price action if the stock violated the $4.50 resistance level.
Over one month since our update on the stock, our prediction remains a strong buy for PLPRF. This is because the company is in a phase where the market is yet unable reflect the true picture of the company’s potential. Also, the company’s potential is identifiable in the fact that the stock as experienced net growth year-to-date. In particular, the PLPRF share price has grown 4.89% year-to-date.
In the latest trading session, the day range for the stock lies between $3.15 and $3.36. A key resistance level has emerged at $3.80 and a breach of this level will give the bulls the required strength to face off the bears.
About Plus Products
PLPRF leverages technology to create cannabis edibles which enhance the wellness of the consumers. The low dose of the products allows the users to control the amount of cannabis they consume. Some of the company’s primary products include mints and gummies which PLPRF manufactures at its factories located in California. The company has a good record when it comes to collaboration with regulators in the young cannabis industry. Headquartered in San Mateo, California, the company has 80 employees.
Q1 2019 Earnings Results
Plus Products is entering a critical phase in its growth as a major player in the cannabis industry. In particular, the company is expanding its market share with an almost complete domination of the California edibles niche. According to the company, the earnings results for Q1 2019 are quite encouraging. To be sure, revenue grew 274% compared $0.9 million recorded in the same quarter 2018. At the same time, the company recorded a higher gross margin of 21% as opposed to 8% in Q1 2018.
Another key figure in the earnings is the size of shareholder equity. To be sure, the first quarter of 2019 saw investor interest in the company grow as evidenced by the higher shareholder equity. By the end of Q4 2018, Plus Products had $25.7 million in shareholder equity. However, the figure is now higher by 17.9% as at March 31, 2019. Although the numbers are unaudited yet, the bottom line is that there is a strong growth momentum for revenue.
Basically, the revenue expansion of the company comes down to increased retail sales. In the first quarter 2019, the retail sales were 4.9% higher at $10.84 million compared to the fourth quarter 2018. According to the CEO and Co-founder of PLPRF, Jake Heimark, the company expects much more growth as the regulatory environment within the cannabis sector continues to get clear.
“Our Q1 results represent continued strong revenue performance and gains in market share. As we progress further into 2019, we hope for an increase in the enforcement and regulatory clarity in the illegal cannabis market,” said Heimark.
Rainbow Sorbet for Pride 2019
Plus Products announced that it will return a limited offering of the Rainbow Sorbet gummies in solidarity with the LGBTQ community. For starters, the product is a seasonal offering which has a distinct flavor and contains a low dose of THC. In the past, special editions of the product have been offered during Valentine’s Day, and during Spring.
This edition of Rainbow Sorbets is an act of compassion for the LGBTQ community and the roll out will involve the San Francisco LGBT Center as a partner. For PLPRF, the occasion will provide an opportunity to serve the community and sell the brand to a larger market.
Clearly, there is great potential in terms of revenue expansion for the company. As per the earnings revenue for Q1 2019, the company stock is obviously undervalued. Investors should expect the stock to enter a phase of a massive rally.
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Disclosure: We have no position in PLPRF and have not been compensated for this article.