General Cannabis Corp (OTCMKTS:CANN) is living up to expectations when it comes to operational efficiencies. Just as was the case in our previous update, the company has done it again, reporting record revenues and Q2 financial results. Amidst the stellar performance, the stock remains a shadow of its former self, after coming under pressure from short sellers.
The stock is down by more than 50% for the year an underperformance that comes at the backdrop of a steep bear run. While the underperformance comes on the heels of a brutal sell-off wave in the overall industry, it is still unclear whether the stock has what it takes to bounce back from current lows.
General Cannabis is currently trading at the $2.65 handle, close to 52-week low of $1.08 a share. A look at the price action, it is clear the stock needs to rise and stabilize above the $3 a share mark if it is to have any chance of rallying to the $4 a share mark.
Above the $4 a share mark, the stock should emerge as a bounce-back play on its way back to 2018 highs. On the downside, the stock faces immediate support at the $2 a share mark, below which the long-term downtrend for the year could push the stock to 52-week lows.
A lack of substantial press releases to paint a clear picture about General Cannabis operations, goals and plans, could in one way have contributed to the poor run in the market. For the stock to bounce back from current lows, the management team need to do an excellent job in shedding more light on long-term plans.
What Does General Cannabis Do?
Formerly Advanced Cannabis Solutions, General Cannabis is a United States-based company that provides products and service to the regulated cannabis industry. It operates through four main segments of Security and Cash Transportation Services, Marketing Consulting and Apparel as well as Operations consulting and Products and Finance and Real Estate.
What Next For General Cannabis after Underperformance
Investor confidence on General Cannabis appears to be at all-time lows, for the year, even as the stock tries to make a comeback after recent sell-off. A spike in trading volume that has helped push the stock up, on the other hand, is a response to recent developments that show the company is not doing badly on the execution of its business strategy.
General Cannabis successfully broke the $1 million mark on revenues in the second quarter, after posting a 34% year-over-year increase to $1.11 million. According to the Chief executive officer Robert Frichtel, the operations segment continues to take advantage of new opportunities helped by the legalization of cannabis in numerous states.
The company’s security segment also continues to gain traction in California, something that the executive says helped drive the revenues in addition to the Chiefton apparel business achieving broader success.
“With a suite of goods and services for customers across the cannabis industry, we are realizing the benefit of providing a synergistic set of solutions to help cannabis businesses realize their growth potential, Our revenue growth reflects the effectiveness of our focus on driving sales and the quality of our deliverables,” said Chief Operating Officer, Joe Hodas.
According to the Executive Chairman, Michael Feinsod, breaking the $1 million quarterly revenue mark is a milestone achievement which proves General Cannabis is a comprehensive resource to the broader cannabis industry.
General Cannabis could pursue growth opportunities through acquisitions according to the Executive Chairman given the underlying strong balance and access to capital. The company is also planning to partner other companies in the industry in a bid to accelerate the new phase of growth especially on new avenues of revenue.
General Cannabis also intends to pursue the California cannabis market with vigor given emerging opportunities in the state on medical and recreational marijuana. Backed by a diversified platform of goods and services, the company should be able to take advantage of emerging opportunities in addition to pursuing sales opportunities in other states.
What Next For General Cannabis
General Cannabis has underperformed for the better part of the year, but so have other companies. While the stock bear run is a major point of concern, it cannot in any way be attributed’ to deteriorating performance when it comes to execution of business strategy.
Record second quarter revenues is a testament that the company is doing exceptionally well on its mission statement to drive sales. That said, it could be a matter of time before the stock bottoms out on investors taking note of the company’s operational efficiencies.
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Disclosure: We have no position in CANN and have not been compensated for this article.