Outlook for Planet 13 Holdings Inc Is Bullish
Planet 13 Holdings Inc (OTCMKTS:PLNHF, CNSX:PLTH) is one of the most interesting pot stocks out there. In Las Vegas, the company owns the world’s largest marijuana dispensary, and in California, it is working on opening the world’s second-largest dispensary.
At its Las Vegas “Cannabis Entertainment Complex,” which is bigger than the average “Walmart” store, Planet 13 attracts shoppers who spend a lot of money.
The popularity of the “Walmart of cannabis” is one big reason why the company reported triple-digit third-quarter revenue growth; yet another quarter of positive earnings before interest, tax, depreciation, and amortization (EBITDA); and positive cash flow.
The U.S. cannabis industry is in its infancy, and Planet 13 is at the beginning of its growth potential.
Planet 13 stock is up about 35% in 2019 and its long-term outlook remains bullish.
PLNHF Stock Overview
Planet 13 Holdings is a seed-to-dale cannabis company that owns the largest legal marijuana dispensary in the world, comprising 112,000 square feet. (Source: “About,” Planet 13 Holdings Inc, last accessed November 26, 2019.)
At Planet 13’s Cannabis Entertainment Complex in Las Vegas, customers can purchase the company’s expanding portfolio of branded products, including “TRENDI” and “Leaf & Vine.”
The Planet 13 Cannabis Entertainment Complex also includes a coffee shop, pizzeria, and event space. The coffee shop and pizzeria can entertain up to 150 customers at a time.
The company’s Las Vegas location is responsible for nine percent of Nevada’s legal cannabis sales.
Planet 13 recently opened Phase II of its Las Vegas dispensary, received final permits to begin production at its production facility attached to the Las Vegas location, and is moving forward with a license acquisition in Santa Ana, California.
PLNHF Stock Information
|Market Cap||$201.2 Million|
|Shares Outstanding||134.3 Million|
|50-Day Moving Average||$1.55|
|200-Day Moving Average||$1.86|
(Source: “Planet 13 Holdings Inc. (PLNHF),” Yahoo! Finance, last accessed November 26, 2019.)
New Production Facility Begins Operations
Due to high demand, Planet 13 has been finding it difficult to keep its own products in stock.
All that is about to change though.
In early November, the company received approval to begin operations at its 15,000-square-foot production facility, where customers can watch products being manufactured behind glass. The new facility increases Planet 13’s in-house production capacity more than tenfold. (Source: “Planet 13 Production Facility Begins Operations,” Planet 13 Holdings Inc, November 1, 2019.)
Around 15% of all sales at the Cannabis Entertainment Complex are of Planet 13’s in-house brands. This new production facility will help the company capture an even larger market share and expand into the wholesale market.
The highly automated production facility will be capable of processing 600 pounds of plant biomass each day, a 1,300% increase in the company’s production capacity.
Planet 13 Launches New Brands
Planet 13 is always expanding its in-house product portfolio.
In late July, the company announced two new edible brands: “Dreamland Chocolates” and “HaHa Gummies.” These products will be made in Planet 13’s new customer-facing production facility in Las Vegas. (Source: “Planet 13 Announces New Edible Brands: HaHa Gummies and Dreamland Chocolates and Provides Update on Phase II Expansion,” Planet 13 Holdings Inc, July 29, 2019.)
On October 22, Planet 13 announced the launch of its new beverage brand “Elysium,” a tetrahydrocannabinol (THC)-infused line of flavored sparkling water. (Source: “Planet 13 Launches Elysium, Sparkling Water Brand,” Planet 13 Holdings Inc, October 22, 2019.)
Entry Into California—and Beyond
Eventually, sales at Planet 13’s Las Vegas Cannabis Entertainment Complex will plateau (you can only expand one location so much). For this reason, Planet 13 is looking to replicate its Las Vegas success in other lucrative markets.
In June, the company announced plans to enter California, the most lucrative cannabis market on the planet. Planet 13 is in the process of acquiring a sales license and lease for a dispensary in Santa Ana. (Source: “Planet 13 Announces California Entry with Marquee Cannabis Dispensary Complex,” Planet 13 Holdings Inc., June 6, 2019.)
The proposed 40,000-square-foot location is just three miles from “South Coast Plaza Mall” and a 10-minute drive from “Disneyland.”
Third-Quarter Revenue Up 241%, Adjusted EBITDA Soars
On November 25, Planet 13 announced its financial results for the third quarter ended September 30. Third-quarter revenue increased 241% year-over-year from $4.9 to $16.7 million. (Source: “Planet 13 Announces Third Quarter 2019 Financial Results,” Planet 13 Holdings Inc., November 25, 2019.)
The company reported net income before taxes of $300,000, versus a net loss of $500,000 in the same period last year. Planet 13 reported a net loss of $1.7 million ($0.01 per share), compared to a net loss of $900,000 (also $0.01 per share) in the third quarter of 2018.
Planet 13 Holdings reported adjusted EBITDA of $3.4 million, up from $376,611 in last year’s third quarter.
The company is well capitalized, with $18.1 million in cash, allowing it to complete all of its growth initiatives.
Planet 13 Holdings Inc could be a great way for investors to diversify their pot stock holdings. As mentioned earlier, the company owns and operates the largest legal cannabis dispensary in the world, and it’s poised to open the second-largest one.
The company’s Las Vegas Cannabis Entertainment Complex recently celebrated its first anniversary, generating $59.5 million of revenue in that first year.
Planet 13 is expected to continue its financial growth as it increases the sales of its in-house products, both on-site and in third-party dispensaries. Furthermore, Phase II of the company’s wholesale operations are just getting underway.
All that should help generate additional value for Planet 13 stock in 2020.