Planet 13: Should You Buy the Dip? This cannabis stock has dropped over 50% in the last 6 months but should you buy the dip?
Planet 13 Holdings (PLNHF) is a vertically integrated cannabis company cultivating and distributing cannabis products in Las Vegas. They have a huge dispensary which is over 100,000 sq ft near the strip. The company is headquartered in Las Vegas, NV. Let’s investigate the fundamentals of Planet 13 to see if it makes sense to buy the dip.
Planet 13: Should You Buy the Dip?
Planet 13 is focused on becoming a leading global brand known for its distribution, operations, and manufacturing of innovative cannabis products. The company is currently open at their Santa Ana CA super store and looking to expand into FL and IL with super stores in 2022.
The company signed strategic partnerships with suppliers of concentrates, cartridges, and tinctures to supply high quality cannabis products for its superstore in Las Vegas. Their new highly automated production facility in Las Vegas will use robotics to reduce costs and will be able to process 600 lbs plant biomass per day. They account for 9% of all cannabis sold in Nevada!
Revenue in Q3 2021 was $33 million and was $22.8 million in Q3 2020 (45% increase). They also have $73 million cash on hand. Net losses for Q3 were $10 million meaning they are burning cash at a high rate.
Will its stock price improve in the long term? We think so. But not before some more losses to end 2021 and into 2022. We think their stock will move below 52-week lows into the low $3s.
Bottom Line: Is Planet 13 Stock a Buy?
The long term outlook, however, is much brighter. Entry into the huge FL and IL markets, any growth in CA and LV with covid-19 easing (large variable with Omicron variants) will have their revenues in the high $300 to $400 million per year range. This will push their stock much higher.
With plans to uplist their stock in the USA and strong cash on hand, there are good signs ahead. Another good sign is that Planet 13 management holds over 50% of company outstanding shares listed which shows their confidence in the long-term outlook of the company. We think it provides great dividends to its shareholders and has a great chance to continue to grow.
For all these reasons we rate PLNHF as Weak for now but Strong in the 1-2 year range. Should you buy the dip? While this is certainly a great long term play, only buy the dip if you’re willing to wait 1-2 years to start seeing significant returns.
Planet 13: Should You Buy the Dip?
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