It’s been a good seven months since cannabis company the Green Organic Dutchman (Green Organic Dutchman Stock Quote, Chart TSX:TGOD) made headlines when its IPO raised $115 million, then the biggest in the sector. But while the stock fared well for a while, more than doubling in value by mid-September, the back end of 2018 has been another story, dropping the stock now 20 per cent below its IPO price of $3.65.
The problem stems from a lack of revenue, says Tim Nash, analyst for Good Investing, who argues that TGOD’s path to success will require establishing itself as the organic pot brand of note.
“This company is not making a profit, so this is on the riskier side of the equation,” says Nash, in conversation with BNN Bloomberg. “What I like about them is the differentiator: because they focus on organic products, if we assume that the cannabis consumer is going to care more about that issue — if the sort of hippie stereotype is true — then I could see this brand doing very well.”
“But this is a sector that’s going to be volatile, so you really have to accept the rollercoaster if you’re going to invest in cannabis,” he says. “I think there’s great long-term potential and, certainly, I consider this to be the best of the organic group when it comes to understanding the environmental implications.”
Mississauga-based TGOD reported its third quarter financials on November 13, showing a loss of $10 million in operating expenses over the quarter with no revenue to report. CEO Brian Athaide spoke of the company’s progress in the construction of facilities in Hamilton, Ontario, and Valleyfield, Quebec, which along with an investment in Jamaican production facilities could bring the company’s capacity to 170,000 kgs, says Athaide.
“TGOD is on track to becoming the largest organic cannabis brand in the world as we continue to aggressively expand our global footprint, including Jamaica, Europe and Latin America, establishing leadership in organic cannabis.” said Athaide, in a press release. “We are excited with the quality and yield of our first commercial crop and are seeing our substantial investments in research and development leading to high quality product with industry leading margins.”