General Cannabis Corp (OTCMKTS: CANN) has taken a huge hit in 2019, just as was the case last year. A plunge to new lows below $1 a share has raised fresh concerns among anxious shareholders. As we look closer, the current sell-off could be a dip worth buying.
General Cannabis Corp Price Analysis
The stock has shed more than 80% in market value over the past year, amidst surging short-selling pressure. The plunge comes even on the Company reporting impressive financial results that underscore underlying growth.
Strong product sales, as well as expansion into new segments and new markets, are some of the developments that continue to strengthen the stock’ sentiments in the market. In addition, the Company has tapped the debt market as it looks to gain access to additional financing for pursuing strategic initiatives.
Amidst the developments, the stock finds itself languishing at all-time lows after a harrowing plunge, the past year. As it stands, General Cannabis may have to rise and find support above the $1.70 mark to avert further slides, given the underlying descending trend line.
A rally-followed bay close above the $1.70 mark should pave the way for bulls to come back in and push the stock back to this year highs of $2.70. Conversely, a violation of the $0.80 support level could pave the way for short sellers to push the stock lower, back to the $0.45 level.
What Does General Cannabis Corp Do?
General Cannabis Corp is a trusted partner in the cultivation, production, and retail of cannabis and its derivatives. The Company provides products and services to the regulated cannabis industry as well as non-cannabis customers in the U.S.
The Company operates under four segments, touching on security and cash transportation, operation consulting and products operations, consumer goods and marketing consulting as well as capital investment and real estate investments.
Solid Q1 Financial Results
Robust revenue growth for the quarter ended March 31, 2019, is one of the positives that continues to prop the stock’s sentiments amidst the ongoing sell-off. For the first time, General Cannabis Corp surpassed the $1 million mark on revenues that came in at $1.3 million, representing a 47% year-over-year increase.
The revenue increase was mostly driven by growth in the operating segment that continued to register strong product sales supplemented by sustained revenue from consulting services. The security segment is also doing exceedingly well as it continues to gain traction in California and other markets.
According to the Chief Financial Officer, Brian Andrews, growth in the Consumer segment goods should persist on the increase in CBD retail operations. The executive has also announced the completion of several infrastructure initiatives that entail personnel utilization as well as e-commerce and inventory management.
“These initiatives position us for continued organic growth and expansion through acquisition. Our investment in our back office allows our entrepreneurial segment leaders to grow their businesses with confidence,” said Mr. Andrews.
According to CEO Michael Feinsod, focus going forward is on expanding the current team all in the effort of accelerating revenue growth. The pursuit of investment opportunities in the legal cannabis and CBD markets should also come into play.
Expanding the breadth of services as well as resources and infrastructure positions General Cannabis for success in the ever-growing regulated cannabis marketplace. Focus on revenue growth and the ability to continue investing in the sector should benefit the company in the end.
General Cannabis Corp has since confirmed the pricing of a $3 million registered direct offering as it seeks to raise additional financing. The Company intends to use net proceeds from the offering to finance product development. Part of the funds will also go towards funding strategic acquisitions that have the potential to strengthen the core business.
General Cannabis Corp has taken a significant hit and now finds itself languishing near all-time lows. Amidst the plunge, the stock might as well have hit bottom and due for a correction higher. A flurry of positive developments key among them being revenue growth, and the raising of additional financing to pursue strategic initiatives could act as catalysts that could cause the stock to climb from current lows.
A rally followed by a close above the $1.7 level could position General Cannabis as a bounce-back play given the improving fundamentals and confirm that the bear trend has been broken.
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Disclosure: We have no position in CANN and have not been compensated for this article.