Shares of Lifestyle Delivery Systems Inc (OTCMKTS: LDSYF) are pulling lower after a 90% spike to 2019 highs. The pullback has left the stock exposed to a crucial support level from where a bounce back could come calling.
LDSYF Catalysts And Price Analysis
A correction higher after the pullback is a possibility as underlying fundamentals support further upside action. The Company is fresh from delivering impressive Q4 financial results, signaling growth in the core business.
The Company’s cannabis cultivation business is also gaining traction, its wholly owned subsidiary Agrotech LLC having planted 10,000 seeds in the recent past. Lifestyle Delivery Systems is also well positioned to benefit from the $57 billion global spending on cannabis as it continues to strengthen its operations in the California cannabis landscape.
The fact that the company is seeing powerful demand for its CBD edibles also points to what could be a record-breaking year on sales growth. Amidst the string of positive developments, the stock has continued to pull lower.
In our view, a bounce back is on the horizon as Lifestyle Delivery Systems closes in on a crucial support level. The $0.25 is the immediate support level above which the stock remains well positioned to continue edging higher on pullbacks.
Lifestyle Delivery Systems rallying and finding support above the $0.35 level, should pave the way for further upside action in line with the bullish trend that began early in the year. Conversely, a sell-off followed by a close below the $0.27 support level could trigger increased short selling pressure that will result in the stock pulling lower.
Lifestyle Delivery Systems Inc Background
Lifestyle Delivery Systems casts itself as a technology company in the cannabis sector. The firm licenses its proprietary technology for producing infused strips that are safer and healthier. The Company offers CannaStrips designed to offer non-intrusive and nonsmoking alternatives. It also offers consulting services to companies and individuals eyeing opportunities in the cannabis sector.
Growing Demand for CannaStrips
Lifestyle Delivery Systems Inc confirming its CBD edible continues to elicit powerful demand is a development that should excite the markets. The company is fresh from delivering its flagship edible product, CannaStrips, to multiple stores in the U.S, consequently strengthening its sales channels.
In addition, the CBD technology company has inked a strategic partnership with Rise Distribution. Under the terms of the agreement, the distributor has agreed to roll out the Company’s CBD edibles to 200+ stores.
The distribution spree comes high on the heels of Lifestyle Delivery Systems Inc, delivering impressive sales result for the fourth quarter ended 2018. The company generated sales amounting to $4 million, in the quarter, marking an important milestone in pursuit of positive cash flow.
“Although it took most of the year to achieve revenue, the fourth quarter numbers are very encouraging. We believe that our numbers in 2019 will be significantly better due in part to anticipated tax reductions by both the City of Adelanto and the State of California. The taxes on cultivation, manufacturing, transportation, distribution, and sales in 2018 amounted to a significant portion of the cost of sales,” explained CEO Brad Eckenweiler.
Cannabis Cultivation Drive
In addition to pursuing CBD sales, Lifestyle Delivery Systems Inc is also strengthening its CBD cultivation capacity. Its wholly owned subsidiary Agrotech LLC is fresh from planting 10,000 CBD seeds on two acres of licensed outdoor cultivation facility in Sacramento.
The farm should be able to produce over 12,000 pounds of biomass yielded in two full auto flower harvests and two full-term harvests. According to President Casey Fenwick, the cultivation phase opens up a lot of new doors on the products that the company can sell through dispensaries and home delivery service.
“The fact that we are capable of producing 4 crops from these farms in a single season is evidence of our projected efficiencies using our genetics. The greater value may be the certainty of our cost of goods and the purity of the biomass produced on these farms,” added Mr. Eckenweiler.
Lifestyle Delivery Systems Inc appears to be a minor correction pending further upside action. Underlying developments, as well as milestones over the past few quarters, underscores why the stock deserves a higher valuation in the market.
Revenue surpassing the $4 million mark and the company strengthening its cannabis cultivation and production capacity are some of the catalysts that could trigger a spike to the upside. In our view, Lifestyle Delivery Systems Inc is likely to post new highs by the end of the year.
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Disclosure: We have no position in LDSYF and have not been compensated for this article.