Planet 13 Holdings Inc.: Shares Up 102% in 2019, But New Developments Point to More Bullish Gains

Planet 13 Holdings Inc Largest Dispensary Operator Enters California
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Planet 13 Holdings Inc: A Top Cannabis Stock for the Second Half of 2019

Planet 13 Holdings Inc (OTCMKTS:PLNHF, CNSX:PLTH) is shaping up to be one of the best small-cap cannabis stocks of the second half of 2019. PLNHF stock is up 102% year-to-date, but new developments point to strong gains coming in the third and fourth quarters of 2019.

Planet 13 Holdings owns and operates the world’s largest cannabis store, the “Planet 13 Cannabis Entertainment Complex,” just steps from the glitz of the Las Vegas Strip. This location sells the company’s own branded products, such as “Medizin,” “TRENDI,” “Leaf &Vine,” and “Planet M.” (Source: “About,” Planet 13 Holdings, Inc., last accessed June 24, 2019.)

That 16,200-square-foot facility covers just 35% of the intended total square footage. Once Phase II is completed in the third quarter, the Planet 13 Cannabis Entertainment Complex will be 112,000 square feet, making it larger than most big box stores.

With Phase II, Planet 13 is looking to diversify itself. The new space will include a pizzeria, coffee shop, event space, and production facility viewable by customers.

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All of this should help Planet 13 increase its already steady foot traffic and conversion rates. It would also be good for the value of Planet 13 stock.

In May, 108,174 people visited Planet 13, which served an average 2,095 customers per day. Over the course of 31 days, Planet 13 rang in 64,930 purchases, with an average sale of $90.63. The visitor conversion rate was 60%. (Source: “Planet 13 Announces Customer Traffic for May 2019,” Planet 13 Holdings Inc, June 5, 2019.)

The Planet 13 Cannabis Entertainment Complex only opened in November 2018. During its first month, 55,433 people visited the dispensary, making 42,157 purchases, with an average price of $79.82. The conversion rate was 76%.

Planet 13 Announces Entry Into California

On June 6, Planet 13 announced that it is acquiring a cannabis sales license and lease for a dispensary in Santa Ana, California from Newtonian Principles, Inc. The $10.0-million transaction includes $6.0 million in cash and 2,039,808 Class A restricted shares. (Source: “Planet 13 Announces California Entry with Marquee Cannabis Dispensary Complex,” Planet 13 Holdings Inc, June 6, 2019.)

The new location is just three miles from the South Coast Plaza Mall, which welcomes 24 million visitors annually. It is also 10 minutes from Disneyland, which greets 18 million people each year.

PLNHF Stock Information
Market Cap $268.9 Million
52-Week High $2.70
52-Week Low $0.50
Shares Outstanding: 119.5 Million
Float 52.1 Million
50-Day Moving Average: $2.03
200-Day Moving Average: $1.68

(Source: “Planet 13 Holdings Inc. (PLNHF),” Yahoo! Finance, last accessed June 24, 2019.)

Strong First-Quarter Results

On May 30, Planet 13 Holdings announced its financial results for the first quarter ended March 31, 2019. First-quarter revenue was $13.8 million, a 286% increase from the $3.6 million recorded in the same period last year. (Source: “Planet 13 Announces First Quarter 2019 Financial Results,” Planet 13 Holdings Inc, May 30, 2019.)

Gross profit before biological adjustments was $7.4 million, a 354% increase from the $1.6 million reported in the same prior-year period.

The first-quarter net loss was $1.2 million, compared to a net profit of $12,741 in the first quarter of 2018. First-quarter 2019 adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) was $1.3 million, compared to $667,563 in the first quarter of 2018.

The company ended the quarter with cash and cash equivalents of $20.2 million.

“The SuperStore is now drawing over 3,000 visitors per day and generating over $5 million a month in revenue,” said co-CEO Larry Scheffler. “For the first two months of 2019, the SuperStore accounted for ~8.2% of all cannabis dispensary sales in Nevada.” 

Scheffler added, “We fully expect to generate additional growth at the SuperStore as we continue to execute awareness initiatives and complete Phase II of our expansion plan, which is designed to generate strong traffic and incremental, high-margin revenue.”

Analyst Take

Planet 13 Holdings Inc’s monthly sales statistics should balloon once it opens Phase II in the third quarter, attracts additional foot traffic, and earns higher-margin revenue.

The company’s quarterly and annual results should also get a massive boost when it opens the doors to the world’s second-largest dispensary in California, the largest marijuana market on the planet.

Planet 13’s success in Las Vegas—and, presumably, Santa Ana—should make it easier for the company to open additional high-end dispensaries in major markets across the country.

All of that should help Planet 13 stock advance in the second half of 2019.