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Should You Buy Curleaf Stock Before the Q4 Earnings Call?

Cannabis legalization in various US states are proving to be an absolute game-changer in the market. Multiple cannabis stocks have gained momentum, and a few companies surprised investors with their expansion strategies and improved performances. One such stock is Curaleaf Holdings (CURLF).

The company has grown at a fast clip since trading at $2.79 in March 2020 – when first recommended to our investors that this cannabis stock was a strong buy. The stock is now at $16.61 with a market capitalization of $11.35 billion.  The company will report its fourth-quarter numbers on March 9, 2021 at 4:30pm EST. But should you buy Curaleaf stock before the Q4 earnings call?

Symbol Name Last Price Change % Change

Curaleaf: Strong Growth Strategies

Curleaf Holdings is a US-based cannabis company that is involved in the production and distribution of cannabis products. The company has gained a reputation due to its service quality and industry-leading products, expertise, and reliability. Curleaf has pursued the acquisition path for growth and currently operates in 23 different states, through 101 local dispensaries and has over 200,000 registered patients.

Curaleaf Cannabis Stock Growth

One of the biggest decisions that Curaleaf made in 2020 was the acquisition of Grassroots, creating the world’s largest cannabis company at the time. This was the second big-ticket acquisition that the company made in 2020 after buying Cura Partners in February 2020.

Both acquisitions expanded business line services across the country and improved the performance of Curaleaf Holdings. Apart from these two buys, the company has acquired 12 businesses since 2018 including brands like Eureka, Acres, OGT, Grassroots, Arrow Alternative Therapies Group, and Blue Kudu.

All of these brands operate in the medical and adult-use cannabis space. Curaleaf has been gaining market share across the country. These acquisition decisions also helped to boost company sales in high-growth cannabis markets like Illinois and Pennsylvania.

Curaleaf’s Current Financial Health

Should You Buy Curleaf Stock Before its Q4 Earnings Call?

For the third quarter of 2020, Curaleaf reported a record total revenue of $182.4 million, which grew 195% year-over-year and 55% sequentially. It also reported a record Adjusted EBITDA of $42.3 million, which grew more than four times compared with the prior-year period and 51% sequentially.

Curaleaf successfully raised $41 million and $24.5 million proceeds from its sale-lease transactions and private placements in the third quarter of 2020.

Curaleaf also expects an increase revenues in the coming years. In the third quarter of 2020, the management fee of the company came down by 81% to $2.1 million compared to $11.1 million in 2019.

Over the last trailing 12 months, the company has recorded negative free cash flows of $110 million and in the third quarter, had $84.6 million as cash in hand.

Upcoming Opportunities for Curaleaf

Upcoming Opportunities for Curaleaf

The company has successfully opened retail stores in many states via acquisitions or collaborations. On February 12, 2021, Curaleaf opened a new store in Bangor, ME. The company is quick on the take and grabs on to any opportunity that comes it’s way.

Recently, adult-use (recreational) cannabis has been legalized in Arizona, Montana, New Jersey, and South Dakota. As the number of states legalizing pot increases, Curaleaf will continue to benefit from multiple growth opportunities in these emerging markets.

The biggest challenge for the company is the negative cash flow. If Curaleaf issues additional shares to increase its balance, its stock price is bound to decline as shareholder value will be diluted.

Bottom Line: Should You Buy Curleaf Stock Before the Q4 Earnings Call?

Curaleaf Cannabis Stock first recommended this stock in March 2020 when it was trading at a fraction of the value today. We continue to believe that Curaleaf is one of the best cannabis stocks for 2021.

The company needs to formulate new strategies to increase its cash position on its own otherwise it can cause long-term issues for the company. But the significant growth in sales, expanding EBITDA margins, and expansion strategies of the company cannot be ignored which lends credence to the belief that the company will perform better in the future and will overcome current deficiencies.

Sure, we may see a slight price correction the day of Curaleaf’s earnings call but still believes this cannabis stock is a strong buy for future growth.

Should You Buy Curleaf Stock Before the Q4 Earnings Call?

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