A lot has changed in the cannabis space since last spring when The Green Organic Dutchman (The Green Organic Dutchman Stock Quote, Chart TSX:TGOD) appeared on the scene with the largest-ever IPO for a Canadian pot company. And while the company continues with its expansion plans, its share price is looking rougher by the day, a scenario which should be speaking volumes to investors, says Jeff Parent, chief investment officer at CastleMoore Inc, who says that until there’s some serious indications of a turnaround, investors should stay clear of TGOD.
With a marketing edge touting its organic bona fides and ambitions to become a top-five producer in terms of sheer volume, The Green Organic Dutchman caught the cannabis wave just right when it listed on the TSX in May of 2018 by raising $132 million.
“We are extremely pleased with the market’s support of our IPO, which is the largest to date on the TSX in the cannabis space,” said then-CEO Robert Anderson. “The additional funds will support the Company’s plans of becoming the world’s leading brand of organic cannabis.”
Those ambitious plans include gunning for 170,000 kg of cannabis production per year through build-outs in Ontario, Quebec and Jamaica. But while expansion plans and sky high capacity projections have been par for the course in cannabis, these days investors appear to be less willing to take a flyer on yet-to-be-realized companies like TGOD, as witnessed by its share price. After its initial offering at $3.65, TGOD shot up to more than $10.00 by mid-September but has been on a downward slide ever since and currently trades in the $2 range. That trajectory may not look much different from many other pot companies whose stocks ran up in the days before legalization in Canada, but TGOD looks particularly ominous, says Parent, who recently spoke of the stock from a technical perspective on BNN Bloomberg.
“When a stock loses this much, it’s on life-support,” says Parent. “[Cannabis] stocks have been very tricky to begin with but this one in particular does not look good and I wouldn’t be a buyer until it shows some signs of life. You’d want to see a breakout with some volume and then that’s when I’d trigger a buy.”
“If you’re holding onto it, maybe consider reducing it,” he says. “I’m not saying that the stock is going to go bankrupt, but it’s certainly not heading in the right direction and it hasn’t been for a while. And there’s not been a lot of support in it so nothing positive, technically.”
TGOD last reported its financials on November 13 for the quarter ended September 30, 2018, featuring a loss of $10 million in operating expenses over the quarter and no revenue to report.