Chart: Cannabis Stocks Show Strong Correlation To Recent Quarterly Results

• This week’s graph displays the results of earnings releases over the last two weeks for a number of tier 2 MSOs. The graph is arranged in increasing order of market-adjusted stock price gains (green line measured on left axis). This was calculated by the percentage change in stock prices from one day prior to the earnings release to one day after the release less the change in the AdvisorShares Pure U.S. Cannabis ETF over the same period.  

• The data shows a 0.5 correlation of share price reaction to reported EBITDA vs. analyst estimates.

• The blue line shows the % EBITDA surprise vs consensus estimates for the quarter. There were two large EBITDA misses for the quarter: Gage GAEGF was 300% below expectations and off the graph, and Goodness Growth OTCQX, which was 150% below expectations. Gage was the worst performer of the group, but the EBITDA miss was modest (<$2M) and mostly attributable due to expansion spending. Goodness growth’s stock actually outperformed the market, because New York rec is growing closer, and the market realizes that near term earnings are not the key factor in the stock’s attractiveness.

• Cansortium CNTMF turned in EBITDA that was 100% over expectations but that overperformance was only a small $ amount. Their stock primarily underperformed due to a cut in guidance on construction delays.

• The yellow line shows the % revenue surprises  and is measured on the left axis. Actual revenues were all with a range of -5% for 4Front to 10% for Cansortium. 4Front’s FFNTF revenue and EBITDA misses were overshadowed by management’s discussion of financing for an upcoming acquisition.

The Viridian Capital Chart of the Week highlights key investment, valuation and M&A trends taken from the Viridian Cannabis Deal Tracker.

The Viridian Cannabis Deal Tracker is a proprietary information service that monitors capital raise and M&A activity in the legal cannabis and hemp industry. Each week the Tracker aggregates and analyzed all closed deals and segments each according to key metrics:

• Industry Sector (one of 12 sectors, from Cultivation to Brands)

• Dollar value of the transaction

• Region in which the deal occurred (country or U.S. state)

• Status of the company announcing the transaction (Public vs. Private)

• Deal structure (equity vs. debt)

• Key deal terms (Pricing and Valuation)

The Viridian Cannabis Deal Tracker provides the market intelligence that cannabis companies, investors, and acquirers utilize to make informed decisions regarding capital allocation and M&A strategy.

 Since its inception in 2015, the Viridian Cannabis Deal Tracker has tracked and analyzed more than 2,500 capital raises and 1,000 M&A transactions totaling over $50 billion in aggregate value.

The preceding article is from one of our external contributors. It does not represent the opinion of Benzinga and has not been edited.