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Why Green Thumb Industries’ Stock Jumped over 10% Today


Dec. 12 2018, Updated 5:02 p.m. ET

Green Thumb Industries

Cannabis producer and retailer Green Thumb Industries’ stock (GTII)(GTBIF) surged over 10% this afternoon. Around 1:05 PM EST, the stock posted a daily high near 14.80 Canadian dollars, up 11.7% from the previous day’s closing price. Today’s sharp recovery comes as a relief for Green Thumb investors (MJ) since the stock had lost about 40.9% in the fourth quarter as of yesterday. Constellation Brands (STZ), Scotts Miracle-Gro (SMG), and Molson Coors Brewing (TAP) are down 12.5%, down 16.0%, and up 1.7% quarter-to-date, respectively.

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Recent fundamentals

On November 27, Green Thumb Industries released its third-quarter earnings. The company’s revenues in the third quarter more than tripled with a solid 344% year-over-year. They were also up 26% sequentially. The company attributed these gains to its “increased distribution of branded products, new store openings, and the commencement of adult use sales in Nevada.”

However, GTII reported a net loss of $3.3 million in the third quarter, much worse than its $0.4 million net profit in the second quarter. It saw no improvement in its bottom line despite rising sales, which could be one reason why investors remained cautious about the stock after the earnings announcement.

In September , Green Thumb founder and chairman Ben Kovler said in an interview with CNBC’s Jim Cramer, “Right now, there is a moat around our business. Both in the states and the country, the federal prohibition provides a moat around our business for us to execute.” Kovler also highlighted the huge growth potential of the cannabis industry.

A technical bounceback?

Last week, Green Thumb Industries’ stock tested a key support level near 11.20 Canadian dollars. Today, the stock approached a resistance near 14.50 Canadian dollars. Closing above this level could attract renewed buying of the stock. Moreover, the company’s rapidly rising revenues and expanding store network could rebuild investors’ confidence.

However, it’s also important to note that Green Thumb Industries’ stock, like many other cannabis stocks, is highly volatile and might not be suitable for conservative investors.

As of December 11, Constellation Brands (STZ), Scotts Miracle-Gro (SMG), and Molson Coors Brewing (TAP) are down 12.5%, down 16.0%, and up 1.7% quarter-to-date, respectively.


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