Flora Growth: Cheap Cannabis Appeal

 

  • Flora Growth promises a long-term growth story supplying the world with low-cost cannabis cultivation.
  • The company has reported minimal revenues so far following an IPO in May and is only now ramping up the business.
  • The stock is difficult to buy until the Flora Growth provides more meaningful financials for analysis.
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The biggest problem with the Canadian cannabis push to supply the global cannabis market is a company like Flora Growth (FLGC). The Colombian cannabis cultivator will always have a cost advantage over developed markets, but the company is still early in the global cannabis export opportunity. My investment thesis is more Neutral on the stock until the business grows into the current valuation.

Read the full article on Seeking Alpha. 

Disclosure: No position mentioned. Please review the disclaimer page for more details. 

Update - Nov. 19

One of the reasons for being Neutral on this stock was the relative low cash balances. $FLGC is now following the $HEXO path of buying a bunch of companies, then being forced to sell more shares. Both ended in tears.

-Flora Growth (NASDAQ:FLGC) slumps 25.5% premarket after pricing its public offering of 10M units, with each unit consisting of one common share and one-half warrant, each whole unit warrant entitling the holder thereof to purchase one Common Share.
-The units are being sold at $3.00/unit.
-Underwriters' over-allotment is an additional 15% of total number of units.
-The five-year warrants will have an exercise price of $3.75/share.

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