Why PLNHF Stock Could Keep Rising
One of the best, yet overlooked, U.S. marijuana stocks right now is Planet 13 Holdings Inc (CNSX:PLTH, OTCMKTS:PLNHF).
Planet 13’s Las Vegas SuperStore, which is just off the Las Vegas Strip, is the largest cannabis entertainment complex in the world.
In December 2022, the company received a license to open a cannabis consumption lounge at that SuperStore. The Planet 13 Entertainment Complex will be the first (legal) space where customers can watch marijuana products being made, purchase them, and consume them all under one roof. (Source: “Planet 13 Announces Approval for Consumption Lounge License,” Planet 13 Holdings Inc, December 5, 2022.)
The company currently has more than 25 cannabis licenses for cultivation, retail distribution, and more in Nevada, California, Florida, and Illinois. Planet 13 Holdings Inc has been opening new dispensaries, and it expects to operate ultra-high-end dispensaries in tier-one markets across the U.S.
In 2021, the company expanded into California, opening the largest cannabis dispensary in the state, a SuperStore in Santa Ana.
It recently opened a dispensary in Port Orange, FL, which is part of the Daytona Beach metropolitan area, a popular tourist destination that attracts more than eight million visitors annually and has a growing population of more than 600,000. The Port Orange dispensary is next to a prominent shopping area, three miles west of the beach, and eight miles south of the Daytona International Speedway.
Planet 13 Holdings Inc is also moving forward with opening a SuperStore in Chicago and a new location in Florida to serve medical marijuana patients.
The company has been working to sell its in-house brands (“Dreamland,” “HaHa,” “Leaf & Vine,” “Medizin,” “Planet M,” and “Trendi”) at its branded stores and through wholesale operations. More than 100 dispensaries currently carry Planet 13’s products. (Source: “Corporate Presentation: November 2022,” Planet 13 Holdings Inc, last accessed February 3, 2023.)
Planet 13 Holdings Inc’s other recent business developments include the following:
- On July 5, 2022, it announced that it had closed on its purchase of a Florida property for its cultivation and production campus
- On August 5, it announced it had agreed to an option to purchase the remaining 51% ownership of Planet 13 Illinois
- On September 26, it announced it had started its first harvest from its Nevada cultivation expansion
- On November 2, it announced it had submitted to regulators a conditional location for its Illinois dispensary
(Source: “Planet 13 Announces Q3 2022 Financial Results,” Planet 13 Holdings Inc, November 10, 2022.)
As of this writing, PLNHF stock is up by 44% year-to-date, and analysts estimate that it could still double in value this year.
Chart courtesy of StockCharts.com
While the company’s third-quarter 2022 financial results didn’t set Planet 13 stock’s price on fire, they did include positive operating cash flow, a high amount of cash, and reduced liabilities.
For the third quarter ended September 30, 2022, Planet 13 Holdings Inc announced that its revenues fell by 22% year-over-year to $33.0 million. Its gross profit in the quarter was $10.6 million, or 41.2% of the company’s sales, compared to $17.7 million, or 53.8% of its revenue, in the same prior-year period. (Source: Ibid.)
The company reported a net loss of $6.3 million in the third quarter of 2022, compared to a net loss of $2.7 million in the third quarter of 2021. Meanwhile, its adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) were $400,000, compared to $2.6 million in the same prior-year period.
Planet 13 Holdings Inc ended the third quarter of 2022 with $50.9 million in cash, total assets of $263.4 million, and total liabilities of $35.9 million (down from $43.1 million a year earlier).
“We have been able to maintain 9% retail market share, despite this economic downturn and an 18% increase in Nevada dispensaries year over year, said Larry Scheffler, one of Planet 13’s Co-CEOs.” (Source: Ibid.)
He continued, “We anticipated this downturn and undertook proactive steps last quarter as well as exercised financial discipline to maintain positive operating cash flow and protect our cash position.”
Bon Groesbeck, Planet 13 Holdings Inc’s other co-CEO, added,
Through the third quarter, we have focused on effectively balancing capital preservation, profitability, and continuing to execute our future growth initiatives. While current retail trends are weak, our focus continues to be on building a stronger, more resilient company that is well positioned to take advantage of future legislative changes.
The marijuana industry hasn’t been doing well lately, but that’s mostly the result of decades-high inflation, rising interest rates, a looming recession, and delays to federal U.S. legalization. For its part, Planet 13 Holdings Inc has been doing everything it can, despite these headwinds.
The company has maintained a market share in Nevada of eight percent to 10% while cutting its costs to maintain its margins. It has been growing its revenues in California and has made progress on its growth initiatives in Florida and Illinois, setting the stage to have operations in four states by the end of 2023.
Planet 13 Holdings Inc also continues to have one of the strongest balance sheets and cleanest capital structures in the cannabis industry.
Add it all up and it looks like Planet 13 stock could be on the rise.