After an impressive start to the New Year that saw the stock touch highs of $0.62 a share, Terra Tech Corp (OTCMKTS:TRTC) has seen its sentiments among investors take a hit. The stock has since resorted to trading in a downtrend, after shedding more than 50% of market value.Despite the huge plunge, we remain bullish about the stock, as was the case in our previous analysis. The sell-off in our view presents a unique buying opportunity.The plunge comes as a surprise, given that the company is fresh from receiving a license for the distribution and retail of cannabis in California. The company also remains on course to receive authorization for the cultivation and manufacture of cannabis for California adult-use and medical markets.The big question now is whether the stock is undervalued given the market opportunity in the ever-growing cannabis business. A close look at the chart below, it is clear the next stop, should the sell-off persist, will be the $0.22 handle, which appears to be a key support level. TRTC Daily ChartA close below the $0.22 level could see the stock plunging even further, to its 52-week lows of $0.14 a share. Terra Tech needs to close above the $0.28 level, to be considered a bounce back play.What Does Terra Tech Do?Terra Tech is a cannabis-focused agricultural company, operating in two segments of Hydroponic produce and Cannabis products. Through its subsidiary, GrowOp Technology, the company designs, develops and markets hydroponic equipment. It also sells hydroponic produce, herbs and floral products.In addition, the company is in the process of expanding its footprint in the medical marijuana space. Terra Tech plans to operate medical marijuana cultivation and dispensary facilities in Nevada. Currently, it sells cannabis flowers and cigarettes through its IVXX, Inc. subsidiary.California Cannabis Market OpportunityTerra Tech skyrocketed to a new 52-week high as investors reacted to the opportunity at hand, as the company moves to start adult-use cannabis sales in California. Taking into consideration the size of the state’s cannabis market, the company should be able to generate significant returns in the near future.In addition to having one of the largest markets, California medical cannabis is one of the oldest and most developed. The state also has the largest population than any state, which provides a unique opportunity for Terra Tech to expand its customer base.What NextTerra Tech is among a handful of companies that have been issued with the adult-use license in the state. What this means is that the company remains well positioned to enjoy the first-mover advantage, which should allow it to grow its brand and gain traction with new customers.The management team has been working round the clock to grow the company’s revenue base. With the adult use approval in California, it appears the efforts are slowly paying off as Terra Tech moves to strategically position itself in the fast-growing space.Legal Cannabis Sales Growth The legal cannabis industry has accelerated at an impressive pace, consumers have spent $6.9 billion on legal cannabis product last year. Sales could surpass the $21 billion mark by 2021, according to estimates.Terra Tech generated revenues of $10.1 million for the quarter ended September 30, 2017, up from $7 million reported comparable period in 2016. The increase was mostly driven by sales in the cannabis segments, which was up by 81.8%.Cannabis Regulation StandardizationThe sales growth came even as the industry continued to struggle with a lack of unified standards for operating a standard business. Every jurisdiction in the country has its own requirements, which marijuana business must adhere to.While some jurisdictions require cannabis, products to come in a childproof package, others don’t. Some jurisdiction bar producers from using cartoon characters in packages that would be attractive to minors, but others don’t.Things are set to change as the National Association of Cannabis Businesses (NACB) is set to unveil national standards designed to protect customers.
“The NACB believes self-regulation is the most effective course of action for our members to control their own destiny in the face of regulators' growing need to intervene. The creation and adoption of national, voluntary standards that are aligned with regulators' priorities take input from government, NACB members, and subject matter experts into careful consideration,” said Andrew Kline, the group's president, and a former federal prosecutor.
What Next For Terra Tech after Recent Sell-Off? Terra Tech is one of the success stories in the cannabis space, with huge potential for growth. The recent sell-off, of the stock, came as a surprise and cannot be associated with deteriorating performance on the business operation front.The company is in a healthy financial position with a good business risk profile, which makes it a compelling investment at current valuation levels. While the underperformance is a point of concern, it might only be a matter of time before the stock starts trading higher as investors take note of its growth metrics.We will be updating our subscribers as soon as we know more. For the latest updates on TRTC, sign up below!Disclosure: We have no position in TRTC and have not been compensated for this article.
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