What happened
Green Thumb Industries (GTBIF -4.33%), a cannabis consumer-packaged goods company and owner of RISE dispensaries, saw its shares drop 16.4% this week, according to data from S&P Global Market Intelligence.
The stock closed at $14.05 last week, opened at $14 on Monday, and dropped to a 52-week low of $11.52 on Friday before bouncing back a bit later in the day. The stock's 52-week high is $35.15 and the stock is down more than 44% this year.
Image source: Getty Images.
So what
Green Thumb announced first-quarter earnings after the close of business on Wednesday and investors were not impressed. It wasn't so much there was bad news, but in the current environment, with the S&P 500 down more than 9% over the past month, investors clearly wanted better news out of Green Thumb and have soured a bit on cannabis stocks in general this year.
The company reported first-quarter revenue of $243 million, up 25% year over year, but flat sequentially. The company had net income of $29 million, or $0.12 in earnings per share (EPS), compared to $22.8 million and $0.10 EPS in the prior quarter. Still, the net income in the quarter represented an increase of 179% year over year and it was the seventh consecutive quarter of positive net income for the company.
The most worrying number in the first-quarter report was that the company's adjusted earnings before interest, taxation, depreciation, and amortization (EBITDA) fell to $67 million, down 11.8% sequentially and 6% year over year. That's a sign that increased employee costs and inflation pressures are cutting into profits. The other concerning note is same-store retail sales were down 3% year over year.
Now what
Green Thumb is one of the more successful cannabis companies, one of the few managing a profit. The long-term prognosis for the industry is still bullish and while the current climate has been demoralizing for cannabis investors, Green Thumb is in a relatively strong position in the long term. In the short term, the stock is likely to bounce back from its 52-week low as investors often use that mark as a way to find bargain stocks.
