Shares of TILT Holdings Inc (OTCMKTS: SVVTF) are down since the turn of the year after feeling the full force of short sellers. The stock has lost more than 50% in market value amidst concerns of soaring bearish pressure.
Tilt Holdings Price Analysis
The plunge has come even on the company announcing expansion into California as part of an aggressive commercialization drive. The company has also increased the production capacity of high quality infused cannabis products, to cater to the adult use market in Massachusetts.
Tilt Holdings balance sheet has also received a boost on the company closing a number of financing deals. Revenue growth is another development that was expected to strengthen the stock’s market sentiments. However, that has not been the case.
The stock has continued to edge lower after skyrocketing late last year to 52-week highs of $3.0. The ongoing correction is staring at support at the $1 a share mark, waiting to see if a bounce back higher will come into play.
A sell-off followed bay close below the $1 psychological level could elicit further selling pressure that could result in Tilt Holdings plunging back to 52-week lows. Conversely, for the stock to bounce back and avert further slides, then it will have to rise and find support above the $1.60 resistance level.
What Does Tilt Holdings Do?
Tilt Holdings casts itself as a vertically integrated technology and infrastructure company. The company focuses on the production and delivery of genetically researched cannabis products. It also engages in the provision of various products as well as services in the cannabis industry.
Tilt Holdings share price activity does not paint an accurate picture of the company’s underlying developments as well as long term prospects. For starters, the company is fresh from posting impressive financial results for the full year ended December 31, 2018.
Revenues for the full year 2018 were up to $5.7 million from $0 generated the previous year. The company also registered $98 million in pro-forma revenue for the year. Gross profit for the year totaled $2.4 million. Tilt holdings ended the year with cash and cash equivalent of $97.2 million compared to $0.1 million as of the end of 2017.
Multi-State Expansion Drive
In a bid to accelerate revenue growth buoyed by the 2018 performance, the company has embarked on an expansion drive in pursuit of new sales opportunities. Through its wholly owned subsidiary Jupiter Distribution, Tilt Holdings has consequently set foot in the burgeoning California cannabis market.
Jupiter, a leader in inhalation and vaporization technology, has commenced distribution of its high-performance technologies in California with the integration of Tilt’s software and supply chain services. Jupiter is to establish a physical presence in the state a move that should allow Tilt holdings to develop stronger customer relations.
“At TILT our vision is to help cannabis businesses better serve their customers and patients by providing them the tools to communicate, operate, and scale with a greater degree of efficiency. Through Jupiter’s expansion with Blackbird and Baker, Jupiter customers benefit from partnered solutions and shared expertise pivotal for success in the global cannabis economy,” said CEO Alex Coleman.
Tilt Holdings has also secured an adult use license that paves the way for it to start selling cannabis products for recreational purposes in Massachusetts. The license is for the company’s 19,602 square foot adult use manufacturing facility in Boulevard.
The company is now set to enhance production capacity at the facility through the implementation of high-end automated manufacturing and packaging equipment.
Tilt Holdings has also secured a $20 million credit facility expected to strengthen the current financial profile. The $20 million boost marks the first step towards a larger capital raise that should allow the company to take advantage of lower cost capital. In addition, it should position the company for future growth.
“By issuing debt, we can both lower our cost of capital and minimize dilution to our shareholders. This is another example of how TILT is focused on adhering to the highest level of financial principles with a commitment to building long-term shareholder value as we have negotiated a low-cost approach to capital for expansion,” explained Mr. Coleman.
Tilt Holdings share price is yet to reflect the company’s tremendous potential after the recent plunge from all-time highs. While the stock is still trading in a steep downtrend, one cannot dispute the company’s growth metrics and long-term prospects.
The steep pullback in our view presents an opportunity to buy a company, trading at a great discount, with tremendous potential.
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Disclosure: We have no position in SVVTF and have not been compensated for this article.