Shares of Planet 13 Holdings Inc Could Double in Value
Pot stocks, once the darling of the COVID-19 era, have been trending lower since the spring of 2021. Inactivity on the federal legalization front has been the biggest headwind for the cannabis sector.
One wonderful marijuana stock that has been unjustly taken down, and which has spectacular long-term potential, is Planet 13 Holdings Inc (CNSX:PLTH, OTCMKTS:PLNHF).
The owner and operator of the two largest cannabis retail stores in the world, Planet 13 Holdings Inc continues to impress. It’s been taking steps to secure its position in the North American marijuana market.
In addition to operating its flagship SuperStore in Las Vegas, Planet 13 entered the California market in July 2021 with the opening of a SuperStore in Orange County.
Since the fourth quarter, Planet 13 Holdings Inc:
- Closed on the acquisition of a Florida cannabis license
- Announced the acquisition of Next Green Wave Holdings Inc., expanding its presence in California
- Initiated a Florida dispensary roadmap with the lease of its first dispensary in Jacksonville
- Announced fabulous Q4 and full-year 2021 results
Despite the that progress and increased sales, Planet 13 stock has taken a beating. As of this writing, PLNHF stock is down by:
- 14% over the last three months
- 43% over the last six months
- 11% year-to-date
- 58% year-over-year
Not the kind of numbers you’d expect from a cannabis company that’s firing on all cylinders—but that’s what makes Planet 13 stock a great long-term opportunity.
Chart courtesy of StockCharts.com
About PLNHF Stock
As mentioned earlier, Planet 13 Holdings owns and operates the two largest cannabis dispensaries in the world.
The company’s Las Vegas SuperStore covers 112,000 square feet. Together with its smaller store, “Medizin Dispensary,” the company maintains a market share above 10% in the Las Vegas cannabis market. (Source: “Corporate Presentation: November 2021,” Planet 13 Holdings Inc, last accessed April 4, 2022)
Planet 13 also owns and operates three cultivation and production facilities in Nevada, where it creates its own branded products. Planet 13’s products are available in its own stores and in more than 55 dispensaries owned by other companies.
In July 2021, Planet 13 Holdings Inc entered the California market with the opening of its Orange County SuperStore. Once phase three of the project is complete, the dispensary will cover 55,000 square feet, about the size of an NFL football field. This will make it the largest dispensary in the most developed cannabis market in the world.
In October 2021, Planet 13 completed the acquisition of a Florida cannabis license for $55.0 million.
In March 2022, it announced that the first location of its planned Florida dispensary network will be in Jacksonville. This is the first of the company’s six initial planned neighborhood-style stores.
As Florida gets closer to legalizing recreational marijuana, Planet 13 Holdings Inc will start building SuperStores in high-traffic tourist destinations throughout the state.
The company’s long-term objectives are aggressive. Over the next five years, Planet 13 hopes to have more than eight SuperStores in tier-one markets in the U.S. and Canada, as well as neighborhood-style stores strategically located across the U.S.
Expanded Presence in California
Planet 13 recently closed on its acquisition of California-based Next Green Wave Holdings Inc. (Source: “Planet 13 Completes Acquisition of Next Green Wave Vertically Integrating in California,” Planet 13 Holdings Inc, March 2, 2022.
The acquisition will serve as the backbone of Planet 13’s operations in California and allow it to expand its product portfolio and retail presence.
“The closing of this transaction significantly improves our position in California,” said Larry Scheffler, co-CEO. (Source: Ibid.)
“It empowers us to improve margins through vertical integration at our store, enter the wholesale market with our portfolio of award-winning products, and gives us an experienced management team and foundation to continue to expand in California.”
Q4 Revenue Up 48% & Full-Year Revenue Up 70%
For the fourth quarter ended December 31, 2021, Planet 13 announced that its revenue increased by 48% year-over-year to $29.9 million. (Source: “Planet 13 Announces Q4 and Full Year 2021 Financial Results,” Planet 13 Holdings Inc, March 28, 2022.)
During the seasonably slow fourth quarter, Planet 13’s brands grew by 21% in a market that was down by five percent. The company’s overall California sales went down sequentially in the fourth quarter, but its Orange County store’s sales went up by 7.2%.
Planet 13 Holdings Inc’s gross profit in the fourth quarter of 2021 was $16.2 million, or 54.3%, compared to $8.6 million, or 42.7%, in the fourth quarter of 2020. The company’s net loss before taxes in the quarter improved by 93% year-over-year from $18.7 to $1.3 million.
Its full-year revenue went up by 70% year-over-year to $119.5 million. The company’s 2021 gross profit was $66.0 million, or 55.2%, compared to $35.1 million, or 49.8%, in 2020. The company’s net loss before taxes in 2021 improved by 67% year-over-year from $17.9 to $6.0 million.
Planet 13 ended the year with cash and equivalents of $61.1 million, compared to $79.0 million at the end of 2020. Its total assets were $216.8 million at the end of 2021, compared to $150.0 million at the end of 2020.
Planet 13 Holdings Inc is a great pot company with a solid balance sheet. In addition to reporting excellent financial results, it has been improving its metrics and has barely gotten started with its North American expansion.
In the last few months, the company has worked hard to operationalize the new assets it has acquired over the past year.
Planet 13 Holdings Inc has been making significant progress in Florida, it opened its second SuperStore in California, and it closed on its acquisition of Next Green Wave, allowing the company to become vertically integrated in the biggest cannabis market in the U.S.
All this indicates that Planet 13 stock could bounce back.