Could this small-cap 7X by 2030?
High Tide Investment Case! Canada's "Costco of Cannabis".
In 2018, Canada became one of the first countries in the world to fully legalize recreational cannabis. The legalization caused a boom in the legal cannabis industry, which was previously dominated by illicit growers.
Hundreds of new companies were founded, and hundreds of existing businesses entered the industry with hopes of huge growth and massive profits.
High Tide was one of these companies!
The Nasdaq listed company was founded in 2009 as a cannabis accessory retailer, but as soon as the legalization rolled in, it expanded to service the legal cannabis market
Huge excitement about the future created a massive bubble across the whole cannabis sector. High Tide was not immune, as their stock rose more than 700% to reach a market cap of CA$590M.
Since then, High Tide’s market cap has fallen to CA$301M, and after a series of diluting acquisitions and share issuances to fund expansion, the stock is down 75% from the all-time high.
Today, however, High Tide is straightening out its business and is starting to look like an attractive small-cap investment.
In this High Tide Investment Case article, I will look at their Canadian business, recent deal to enter Germany, potential for other markets, Costco-style loyalty program, and valuation!
Let’s get into the weeds of this small-cap opportunity!
1. Canadian Cannabis Market
2. High Tide Presence
3. Loyalty Program
4. Store Performance
5. International Expansion
6. Financials
7. Valuation
8. Conclusion
1. Canadian Cannabis Market
The 2018 legalization caused a lot of excitement in the industry, creating a massive race to the top. It soon became clear that this race was going to be quite expensive, so High Tide and many other cannabis businesses IPO’ed to raise money and raise money they did.
Tilray Brands raised US$1.1B and at one point reached a valuation of US$10B as speculative investors sent this cannabis stock sky-high (pun intended). Since then, Tilray has crashed more than 90% due to slowing growth and massive losses. There are countless companies with similar stories.
Unfortunately, progress in the Canadian industry has been much slower than originally expected. Here are the main causes: