Planet 13 Holdings Inc.: Shares Up 102% in 2019, But New Developments Point to More Bullish Gains

Planet 13 Holdings Inc: A Top Cannabis Stock for the Second Half of 2019

Planet 13 Holdings Inc (OTCMKTS:PLNHF, CNSX:PLTH) is shaping up to be one of the best small-cap cannabis stocks of the second half of 2019. PLNHF stock is up 102% year-to-date, but new developments point to strong gains coming into the third and fourth quarter of 2019.

Planet 13 Holdings Inc is home to the world’s largest cannabis store, the “Planet 13 Cannabis Entertainment Complex,” located just steps from the glitz of the Las Vegas Strip. This location sells the company’s own branded products, such as “Medizin,” “TRENDI,” “Leaf &Vine,” and “Planet M.” (Source: “About,” Planet 13 Holdings, Inc., last accessed June 24, 2019.)

That 16,200-square-foot facility covers just 35% of the intended total square footage. Once Phase II is completed in the third quarter, the Planet 13 Cannabis Entertainment Complex will be 112,000 square feet, making it larger than most big box stores.

With Phase II, Planet 13 is looking to diversify itself. The new space will include a pizzeria, coffee shop, event space, and production facility viewable by customers.

All of this should help Planet 13 increase its already steady foot traffic and conversion rates.

In May, 108,174 people visited Planet 13, serving an average 2,095 customers per day. Over the course of the 31 days, Planet 13 rang in 64,930 purchases, with an average sale of $90.63. The visitor conversion rate was 60%. (Source: “Planet 13 Announces Customer Traffic for May 2019,” Planet 13 Holdings Inc, June 5, 2019.)

The Planet 13 Cannabis Entertainment Complex only opened in November 2018. During the first month, 55,433 visited the dispensary, registering 42,157 purchases, with an average price of $79.82. The conversion rate was 76%. Coffee, pizza, and other non-cannabis related products should help it boost its conversion rate.

Announces Entry into California

On June 6, Planet 13 announced it is acquiring a cannabis sales license and lease for a dispensary in Santa Ana, California, from Newtonian Principles, Inc. The $10.0-million transaction includes $6.0 million in cash and 2,039,808 Class A restricted shares. (Source: “Planet 13 Announces California Entry with Marquee Cannabis Dispensary Complex,” Planet 13 Holdings Inc, June 6, 2019.)

The new location is just three miles from the South Coast Plaza Mall, which welcomes 24 million visitors annually. It is also 10 minutes from Disneyland, which greets 18 million people each year.

(Source: “PLNHF Key Statistics,” Yahoo! Finance, last accessed June 24, 2019.)

Strong First-Quarter Results

On May 30, Planet 13 Holdings Inc announced its financial results for the first quarter ended March 31, 2019. First quarter revenue was $13.8 million, a 286% increase over the $3.6 million recorded in the same period last year. (Source: “Planet 13 Announces First Quarter 2019 Financial Results,” Planet 13 Holdings Inc, April 30, 2019.)

Gross profit, before biological adjustments, was $7.4 million, a 354% increase over the $1.6 million reported in the same prior-year period.

First-quarter net loss was $1.2 million, compared to net profit of $12,741 in the first quarter of 2018. First quarter 2019 adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) was $1.3 million, compared to $667,563 in the first quarter of 2018.

The company ended the quarter with cash and cash equivalents of $20.2 million.

“The SuperStore is now drawing over 3,000 visitors per day and generating over $5 million a month in revenue. For the first two months of 2019, the SuperStore accounted for ~8.2% of all cannabis dispensary sales in Nevada,” said co-CEO Larry Scheffler.

“We fully expect to generate additional growth at the SuperStore as we continue to execute awareness initiatives and complete Phase II of our expansion plan, which is designed to generate strong traffic and incremental, high-margin revenue.”

Analyst Take

Planet 13 Holdings Inc’s monthly statistics should balloon once it opens Phase II in the third quarter, attracts additional foot traffic, and higher-margin revenue.

The company’s quarterly and annual results should also get a massive boost when it opens the doors to the world’s second largest dispensary in California, the largest marijuana market on the planet.

The company’s success in Las Vegas and, presumably, Santa Ana should make it easier for it to open additional high-end dispensaries in major markets across the country, all of which should help PLNHF stock advance in the second half of 2019.