Shares of Village Farms International Inc (OTCMKTS:VFFIF) were the subject of increased short selling pressure after the company reported disappointing Q3 financial results, depicted by a wider than expected net loss. The stock consequently plummeted to one-year lows. Fast forward, the stock has bounced back, helped by improving fundamentals that have once again reaffirmed the company’s growth metrics.
Share Price Analysis
The stock is already up by more than 100% at the back of a steep uptrend that continues to gather pace. Village Farms is the subject of renewed investor interest on announcing plans to list in the U.S. The company is in the process of listing its stock in the NASDAQ, in pursuit of more liquidity as well as exposure to institutional investors.
NASDAQ listing push comes on the heels of the company announcing the expansion of its Pure Sunfarms licensed production area to 825,000 square feet. The company announcing plans to become a vertically integrated leader in the legal hemp industry also appears to have excited the market.
The stock has since started trading in an uptrend, in response to renewed investor interest in the wake of recent developments. High turnover in traded shares underlines the fact that the stock will continue climbing the ladder, having already broken out of a key trading range.
A breach of the $5.60 resistance level has opened the door, for the stock to continue powering high as the bulls continue to overpower short sellers. Price action activity indicates the stock could be headed to 52-week highs of 7.15
Any sell-offs should experience strong support at the $5.60 level. A breach of the key support level could trigger a drop to the $5.60 and $3.50 trading range. In our view, Village Farm looks set to continue trading in an uptrend.
About Village Farm
Village Farm casts itself as vertically integrated greenhouse grower in North America. Through its subsidiaries, the company produces, markets and distributes greenhouse produce such as tomatoes bell peppers and cucumbers. In the recent past, the company has sought to diversify its operations having ventured into the cannabis business.
Village Farms is the center of attention, in the cannabis sector, on announcing plans to list its common share in the NASDAQ Capital Markets. Listing on the NASDAQ seeks to take advantage of the fact that the company has assets and operations across the U.S.
By listing in the U.S, the company will ramp its operations in pursuit of opportunities in the U.S hemp and CBD Industry. Listing in the NASDAQ should also provide the company with broader exposure and greater liquidity from U.S investors.
“A NASDAQ listing will provide Village Farms with access to the largest equity market in the world to support our intended hemp and CBD growth strategy should U.S. state laws follow the U.S. federal decision to legalize hemp,” said Michael DeGiglio, Chief Executive Officer, Village Farms.
The listing development follows the announcement that the company’s Canadian joint venture has completed the conversion of all its growing area in its 1.1 million square foot greenhouse in British Columbia
The company’s low-cost, high-quality cannabis production joint venture, Pure Sunfarms has secured approval from Health Canada to expand its cannabis production area by 138,000 square feet. The expansion will take the production area to 825,000 square feet.
The expansion is part of Village Farms push that seeks to increase cannabis production capacity to 75,000 kilograms in the first half of the year.
“As the Canadian cannabis market continues to be challenged by a supply shortage, Pure Sunfarms has already established itself as one of the premier suppliers, with a reputation for industry-leading operations and quality, consistency, and safety of the product,” said Mr. DeGiglio.
The passing of the 2018 Farm Bill in the U.S has created tremendous opportunities that Village Farms intends to pursue. The company has already strengthened its cannabis production capacity with the expansion of its cultivation area through the Pure Sunfarms joint venture.
Increased production capacity should allow the company to meet the ever-growing demand for cannabis products and in the process generate significant value. Listing on the NASDAQ is another development that should provide the company with much-needed liquidity and exposure to institutional investors.
That said 2019 is turning out to be an inflection year as the stock has bottomed out. The stock looks set to continue edging higher as underlying fundamentals continue to improve.
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Disclosure: We have no position in VFFIF and have not been compensated for this article.