Greenlane Holdings Inc: Beaten-Down Cannabis Play With Massive Upside
Greenlane Holdings Inc (NASDAQ:GNLN) is definitely one of those cannabis stocks that the market has been overlooking. The company only started trading on the Nasdaq back in April, but since then, GNLN stock has tumbled approximately 87%.
The cannabis stock market might be in decline, but Greenlane Holdings stock has, unfortunately, done nothing but slide since its initial public offering (IPO). Not the kind of action that gives investors confidence.
This might have more to do with timing than anything. Greenlane Holdings Inc is one of the largest sellers of premium cannabis accessories and CBD products on the planet. It has a massive global footprint and strong market penetration.
And since the start of September, the company has made the kinds of announcements that would normally send a stock significantly higher.
Despite the slide in the price of GNLN stock, Wall Street remains exceptionally bullish on the company, with, on the high end, a 12-month consensus price target of $22.00.
This implies a 471% gain from its current price. Even the median 12-month price target of $19.00 suggests a price gain of more than 390%.
Are these targets aggressive?
Wall Street is known for being conservative when it comes to stock price forecasts. Regardless, when it comes to the cannabis industry’s potential, Greenlane Holdings stock will be one of the most interesting stocks to watch over the coming quarters.
GNLN Stock Overview
Greenlane Holdings Inc is one of the largest sellers of cannabis accessories, cannabidiol (CBD), and liquid nicotine products. The Boca Raton, Florida-based company’s products can be found in more than 11,000 retail locations (licensed cannabis dispensaries and smoke shops) in North America.
Greenlane owns its own brands, but it is also the go-to retailer for other cannabis companies, including JUUL Labs, Inc., STORZ & BICKEL GmbH & Co. KG, Grenco Science, Bloom Farms, and Mary’s Nutritionals.
The company also owns “Vapor.com,” an e-commerce superstore that provides virtually everything for the vaping connoisseur.
GNLN Stock Information
|Market Cap||$161.8 Million|
|Shares Outstanding||10.0 Million|
|50-Day Moving Average||$6.13|
|200-Day Moving Average||$10.60|
(Source: “Greenlane Holdings Inc (GNLN),” Yahoo! Finance, last accessed September 25, 2019.)
Greenlane Holdings stock doesn’t have a pretty price chart (see below). Then again, the company had the misfortune of going public at a time when the entire cannabis industry was starting to sell off.
Despite the downtrend in the stock market, Greenlane reported solid second-quarter financial results. The company has also announced new products and distribution partnerships, and it has expanded into Europe.
These are not the kinds of announcements that justify the current shape of GNLN stock.
Chart courtesy of StockCharts.com
Acquisition Expands Greenlane’s Footprint Into Europe
On September 24, Greenlane Holdings announced a definitive agreement to acquire Conscious Wholesale, a leading European retailer and wholesaler of vaporizers and other consumption accessories. Conscious Wholesale distributes products to more than 20 European markets. (Source: “Greenlane Expands Global Footprint with European Acquisition,” Greenlane Holdings Inc, September 24, 2019.)
In addition to expanding Greenlane’s global footprint, the acquisition gives the company a retail shop in the Netherlands and e-commerce web sites, including “Vaposhop.com.”
Greenlane was also able to enter into an agreement with Access Fulfillment, a UK-based company, for logistics services. This allows Greenlane to deliver products to customers throughout Europe.
Greenlane’s CEO Aaron LoCascio commented, “The addition of the Conscious Wholesale platform, Dutch retail shop Azarius, and e-commerce site Vaposhop.com immediately provides us with a strong and established foothold in Europe and creates opportunities to expand the distribution of both our third-party suppliers and house brands.”
Agreement for Strategic North American Expansion of Retail Stores
On September 12, Greenlane announced an agreement with Jamestown, a real estate investment and management company, for the strategic expansion of its “Higher Standards” stores in North America. (Source: “Greenlane Enters Into Agreement with Jamestown for Strategic North American Expansion of Higher Standards Retail Stores,” Greenlane Holdings Inc, September 12, 2019.)
Greenlane opened its first Higher Standards store in New York City in December 2017 and it opened its second store in Atlanta in March 2019. Greenlane and Jamestown worked together on the site location, design, and development of both stores.
Higher Standards is a first-of-its-kind concept shop that provides carefully selected products, including smoking accessories and lifestyle products from Greenlane’s house brands and partner brands.
In addition to the stores in New York City and Atlanta, Greenlane has opened Higher Standards locations in Los Angeles and Santa Ana, California.
The partnership is expected to lead to further expansion of Higher Standards retail stores in key markets across North America.
By the end of 2019, Greenlane plans on having four Higher Standards stores in operation, and the company has plans to expand both domestically and internationally.
Record Second-Quarter Revenue Growth
On August 12, Greenlane announced its financial results for the second quarter ended June 30. Second-quarter revenue increased 30.6% year-over-year to a record $53.0 million. (Source: “Greenlane Announces Financial Results for the Second Quarter of 2019,” Greenlane Holdings Inc, August 12, 2019.)
The company reported a second-quarter net loss of $3.2 million. Adjusted net loss was $1.2 million, compared to an adjusted net income of $1.1 million in the same period last year.
Greenlane Holdings ended the quarter with a strong financial position, including cash of $69.3 million, compared to $7.3 million at the end of 2018.
During the quarter, Greenlane expanded its hemp-derived CBD product line, entered into an exclusive partnership with Canopy Growth Corp (NYSE:CGC) to distribute STORZ & BICKEL vaporizers in the U.S., added closed-system vaporizer products, and began shipping “VIBES” rolling papers.
Greenlane Holdings Inc is an overlooked ancillary cannabis stock that has tremendous long-term growth potential.
Greenlane Holdings stock has been hurt by the sell-off in the cannabis industry, but the company has been doing everything it needs in order to drive growth and deliver value for shareholders.