20 Jun

Greenlane Holdings Recovers after Slumping to All-Time Low

WRITTEN BY Mohit Oberoi, CFA

Greenlane Holdings

Yesterday, Greenlane Holdings (GNLN) fell a whopping 17.1%. The stock has now fallen 28% this month, and it hit its all-time low yesterday. Greenlane Holdings listed in April and priced its IPO at $17 per share. However, since the stock surged more than 25% after its listing, it has been a sorry story for Greenlane Holdings investors. Based on yesterday’s closing prices, Greenlane Holdings has fallen more than 35% from its IPO issue price. However, the stock is in the green in early trading today.

Earnings

Greenlane Holdings is an ancillary cannabis play, and it isn’t involved in cannabis cultivation. Greenlane Holdings is a distributor of vaporization products and other accessories. The company posted a net loss of $17.6 million in the first quarter on sales of $49.9 million. While cannabis companies are posting an astronomical increase in revenues, Greenlane Holdings’ first-quarter revenues rose only about 15%. The company is expected to post revenues of $213 million this year. Next year its revenues are expected to rise 32% to $282 million. Greenlane Holdings is expected to post a net profit of $8 million in 2020 and $18 million in 2021. While Greenlane Holdings does not offer the kind of growth that pure-play cannabis players offer, its valuation is also in line with its growth prospects. The company is valued at an EV-EBITDA of 11.5x its 2020 estimates and 6.4x its 2021 estimates.

Analysts’ recommendations

Meanwhile, amid the slump in Greenlane Holdings stock price, Canaccord Genuity, which has a “speculative buy” rating on the stock, today lowered its target price from $22 to $20. Overall, Greenlane Holdings has received a “strong buy” rating from three analysts, while two analysts have a “buy” rating on the stock. The stock’s mean consensus price target of $22.1 represents more than 100% upside over its closing prices yesterday.

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