Greenlane Holdings Inc: Overlooked Pot Stock Up 310%+ Since March

Greenlane Holdings Inc Erases All COVID-19 Losses

Greenlane Holdings Inc (NASDAQ:GNLN), a leading global cannabis accessories distributor, has been one of the more compelling pot stocks to watch during the COVID-19 economy.

Greenlane Holdings stock is up 7.3% year-to-date while the S&P 500 is down five percent and the ETFMG Alternative Harvest ETF (NYSE:MJ) has slipped 22.5%.

More recently,  GNLN stock has soared 246% since bottoming (along with the rest of the market) in mid-March. More impressively, on June 8, GNLN stock hit an intra-day high of $4.20, which represents a 311% gain over its March 18 bottom of $1.02.

The company’s share price has given up a little ground, trading at around $3.54 per share, but overall it remains bullish.

In addition to rising along with investor sentiment within the cannabis sector, Greenlane Holdings stock has been trending higher because of positive developments. The company reported solid first-quarter results and it has been successfully moving away from high-volume, low-margin products and sales—in favor of higher-margin sales and the promotion of its house brands.

In light of economic uncertainty related to COVID-19, Greenlane has identified a number of cost-cutting opportunities. At the same time, the company continues to identify strategic acquisitions that will help drive sustained long-term growth and profitability.

GNLN Stock Overview

Greenlane Holdings Inc is one of the largest sellers of cannabis accessories, cannabidiol (CBD), and liquid nicotine products. It is focused on four main revenue streams: business-to-business (B2B), direct-to-consumer, drop ship, and supply and packaging. (Source: “Greenlane Company Overview November 2019,” Greenlane Holdings Inc., last accessed June 26, 2020.)

Through the company’s B2B channel, it sells a wide variety of third-party brands, including “Storz & Bickel,” “JUUL,” and “Firefly.”

Greenlane also sells its own house brand of products, including “Pollen Gear,” a provider of child-resistant packaging; “VIBES” rolling papers; the Marley Natural accessory line; the “K. Haring“ accessory line; “Aerospaced” grinders; and “Higher Standards” accessories.

Greenlane also owns and operates “Vapor.com,” an industry-leading online retailer with over 292,000 unique monthly visitors.

The company has operations in 13 cities across the U.S., Canada, and Europe. Beyond that, Greenlane is looking at expanding its international presence in South America and Australia.

The company’s customer base boasts more than 11,000 retail locations, including licensed cannabis dispensaries and smoke/vape shops. In addition to smaller shops, Greenlane also serves larger customers like Cresco Labs Inc (OTCBB:CRLBF, CNSX:CL) and MedMen Enterprises Inc (OTCMKTS:MMNFF, CNSX:MMEN)

Chart courtesy of StockCharts.com

Spring 2019 wasn’t exactly the best time for a pot stock to hold an initial public offering (IPO). The entire sector was experiencing a pullback, which impacted even the best marijuana stocks, including Greenlane. That downtrend was reversed after the market bottomed in March, fueled by uncertainty around COVID-19.

Greenlane Holdings stock has been on a great upward trajectory and has erased its year-to-date losses. And its outlook remains bullish.

GNLN stock just flashed a major bullish indicator: a golden crossover, wherein the 50-day moving average crosses over the 200-day moving average. It usually predicts a share price moving higher.

Solid First-Quarter Results

On June 4, Greenlane announced its financial results for the first quarter ended March 31. First-quarter revenue came in at $33.9 million, compared to $49.9 million in the first quarter of 2019. The drop in revenue is largely being attributed to the Food and Drug Administration’s (FDA) restrictions on sales of certain products, mainly mint-flavored JUUL. (Source: “Greenlane Announces First Quarter 2020 Financial Results,” Greenlane Holdings Inc., June 4, 2020.)

On top of that, the execution of Greenlane’s new business plan is seeing it move away from low-margin products like JUUL to higher-margin products.

To that end, Greenlane’s JUUL sales fell to $4.4 million from $21.0 million in the same prior-year period. Net sales of Greenlane Brands were up 37% year-over-year at $6.3 million, representing 18.5% of total revenue.

Greenlane reported a first-quarter net loss of $16.8 million, versus $17.7 million in the same prior-year period. Adjusted net loss was $6.1 million, compared to $1.5 million in the first quarter of 2019.

The company ended the first quarter with a strong balance sheet, including cash and cash equivalents of $43.9 million and total debt of just $8.3 million.

Aaron LoCascio, Chairman and CEO commented, “We have made significant strides in the execution of our business transformation plan and are focused on pursuing higher margin revenue opportunities while strategically right sizing our operations to the current environment.”

LoCascio added, “We’re beginning to see the positive impact of the investment we made to develop and launch our Greenlane Brands, which accounted for a record 18.5% of net sales and drove the sequential improvement in our gross margin.” (Source: Ibid.)

Analyst Take

Greenland Holdings stock is a great, overlooked cannabis stock with tremendous short- and long-term growth potential.

Greenlane Holdings Inc’s business transformation plan continues to see the company streamline its operations, seek out higher-margin revenue opportunities, promote its in-house brand, and expand its operations internationally.