Last year was transformative for Fire & Flower Holdings Corp (TSE:FAF, OTCMKTS:FFLWF), and by all accounts, 2021 could be even more monumental for the Canada-based cannabis retailer.
FFLWF stock has made serious moves over the last number of weeks, helping it soar 50% year-to-date and 480% since it bottomed (along with the rest of the stock market) in March 2020. Fire & Flower stock continues to hold on to those massive gains, and investors are optimistic for a number of reasons.
In addition to reporting strong third-quarter results, which included positive adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA), Fire & Flower recently announced plans to uplist to the Nasdaq. The anticipated listing would help the company attract attention in the U.S. as it looks to expand its brand outside of Canada.
To that end, Fire & Flower Holdings Corp also recently announced plans to enter the U.S. cannabis market through a strategic licensing partnership and acquisition option with American Acres Managers.
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FFLWF Stock Overview
Fire & Flower is Canada’s largest legal cannabis retailer, with 75 stores across the country. The company’s retail stores operate under the banners “Fire & Flower Cannabis,” “Friendly Stranger,” “Happy Dayz,” and “Hot Box.” (Source: “Investor Presentation,” Fire & Flower Holdings Corp, February 4, 2021.)
There is lots of room for growth, too. The company is closely watching regulatory environments and taking proactive steps to ensure early market entry when additional legal marijuana retail opportunities arise both domestically and internationally.
“Hifyre” is the company’s proprietary cannabis digital retail and analytics platform. Hifyre provides marijuana businesses with a deep understanding of consumer behavior and preferences.
Hifyre’s products include “HifyreIQ” (provides real-time data analytics), “HyfiyreReach” (connects brands with consumers), and “HifyreONE” (digital toolset that provides a personalized shopping experience.)
Back in July 2020, the company launched two cannabis stores that are part of its partnership with Canada-based retail giant Alimentation Couche-Tard (TSE:ATD.A, OTCMKTS:ANCTF). (Source: “Fire & Flower Launches Pilot with Alimentation Couche-Tard Through Circle K Co-Located Stores,” Fire & Flower Holdings Corp, last accessed March 1, 2021.)
Alimentation Couche-Tard has a massive network of convenience stores, spanning approximately 10,000 locations across North America and totaling more than 16,000 stores worldwide. Its retail banners include “Circle K,” “Corner Store,” “Couche-Tard,” “Holiday,” and “Kangaroo Express.”
In July 2019, Fire & Flower announced that it had entered a strategic $26.0-million investment with Alimentation Couche-Tard, giving the convenience store giant a 12% stake in the pot company—with options to increase its stake to 50.1%. (Source: “Alimentation Couche-Tard Announces a Strategic Investment in Fire & Flower, a Leading Cannabis Retailer,” Cision, July 24, 2019.)
The relationship provides Fire & Flower with massive opportunities to grow its business and expand its presence in Canada and internationally.
Plan to Uplist to Nasdaq
In mid-February, Fire & Flower announced that it had submitted an initial application to list its common shares on the Nasdaq stock exchange. (Source: “Fire & Flower Announces Application to List on NASDAQ,” Fire & Flower Holdings Corp, February 16, 2021.)
The company expects that the Nasdaq listing will assist in attracting retail and institutional investors that are interested in Fire & Flower’s international growth ambitions, as well as provide the company with “increased access to strategic partners, deal-flow and value creation opportunities.”
Fire & Flower to Enter U.S. Pot Market Through Licensing Partnership
Fire & Flower also recently announced that it had entered into agreements with a Canadian private company, American Acres Managers. The agreements allow its Fire & Flower brand, store operating system, and Hifyre technology for dispensaries in high-growth states including California, Nevada, and Arizona. (Source: “Fire & Flower Enters U.S. Cannabis Market Through Strategic Licensing Partnership and Acquisition Option with American Acres,” Fire & Flower Holdings Corp, February 22, 2021.)
The company expects to open its first Fire & Flower store in Palm Springs, CA in the first half of fiscal 2021 (ending April 31, 2021).
Under the agreement, Fire & Flower will have the option to acquire American Acres. The purchase would take place when recreational cannabis becomes legal at the federal level in the U.S.—or when permitted by the Toronto Stock Exchange or any other exchange on which Fire & Flower stock is listed.
Trevor Fencott, Fire & Flower Holdings Corp’s CEO, noted, “Due to the rapid success of our operational model in Canada, the Fire & Flower brand is poised to become a key player in the U.S. cannabis industry, where the demand for incorporating technologically advanced systems in cannabis retail has never been greater.” (Source: Ibid.)
He added, “Our Hifyre technology has surpassed our competitors’ offerings by streamlining the customer experience and driving greater margins, and places the Fire & Flower brand in a unique position to play a leading role in competitive U.S. cannabis markets.”
Strong Third-Quarter Results
Last December, Fire & Flower announced that its revenue for the third quarter ended October 31, 2020 increased 142% year-over-year to $33.1 million. (Source: “Fire & Flower Announces Third Quarter 2020 Financial Results and Achieves Positive Adjusted EBITDA,” Fire & Flower Holdings Corp, December 15, 2021.)
The company reported positive adjusted EBITDA of $1.2 million, compared to an adjusted EBITDA loss of $300,000 in the second quarter of 2020 and an adjusted EBITDA loss of $4.2 million in the same prior-year period.
Its gross profit in the third quarter was $9.0 million, an increase of $5.2 million from the prior year and an increase of $900,000 from the previous quarter.
“The achievement of positive Adjusted EBITDA is a significant milestone and demonstrates our continued track record of delivering on our corporate objectives,” said Fencott. (Source: Ibid.)
“We continue to work at maintaining positive Adjusted EBITDA and aggressively pursue growth opportunities for the company.”
Fire & Flower Holdings Corp is not very well known in the U.S., but that should change over the coming quarters. As mentioned earlier, the Canadian-based company announced plans to uplist to the Nasdaq and expects to open its first U.S. dispensary in California in the coming months.
Few cannabis stocks with amazing long-term growth potential remain undiscovered, but Fire & Flower stock is one of them.