Planet 13 Holdings PLNH, a multi-state cannabis operator, is trailing its peers significantly, facing challenges stemmed from a poorly timed equity offering and alleged embezzlement woes, as per senior analyst Pablo Zuanic.
Despite these setbacks, Planet 13’s stock is currently trading at a substantial discount, with a valuation that stands at 1.1x projected 2024 sales—below the industry standard of 1.7x.
Zuanic remains optimistic about the company’s outlook, especially with opportunities arising in the Florida market. Planet 13 continues to be a prominent retail player in Nevada, renowned for its scalable superstore model, positioning itself for growth with the potential legalization of cannabis in Florida.
Legal Disputes in the Sector
Planet 13 Holdings has launched a $16.5 million lawsuit against Casa Verde Capital, co-founded by Snoop Dogg and El Capitan Advisors for alleged fraudulent activities. The lawsuit alleges deceptive practices in promoting cannabis investment success to attract clients, including Planet 13, which entrusted them with $21 million, as reported by Green Market Report.
The company accuses El Capitan of being a front for Casa Verde’s advantage, aiming to recover the lost funds and gain judicial oversight. Casa Verde, on the other hand, refutes the claims and expresses disappointment at facing legal action despite offering cooperation.
Financial Highlights and Future Projections
Despite a drop in total sales during the fourth quarter of 2023, particularly in Nevada and California, Planet 13 has shown improvements in gross margins and decreased cash SGA expenditure. This has led to a more favorable EBITDA margin, ultimately resulting in enhanced profitability and efficiency.
With $17.3 million in cash at the end of CY23 and further potential post-VidaCann deal closure, the company is focusing on optimizing its financial health and capitalizing on growth opportunities.
Strategic Initiatives and Expansion Plans
Planet 13’s strategic endeavors include the acquisition of VidaCann, fundraising for future expansions, and exploring tax strategies aimed at reclaiming excess tax payments. The acquisition positions the company favorably in the Florida market and sets the stage for extensive store network expansion.
In line with scaling operations in Nevada and enhancing efficiencies, Planet 13 expects significant growth in the future, benefiting both the company and its shareholders.
Market Prospects and Growth Strategies
Florida presents a substantial growth opportunity for Planet 13, with potential revenue and EBITDA margin increments expected from the state’s recreational market. The company’s plans to introduce new brands and practices at VidaCann stores and expand the network underscore its commitment to capturing a more extensive market share in Florida.
Proforma Valuation and Investment Overview
Despite recent challenges and stock price declines, Planet 13’s proforma valuation shows a considerable discount compared to sector norms. The analysis indicates that the current valuation fails to fully reflect the potential EBITDA growth from the Florida market, the scalability of the superstore concept, and plans to strengthen the Nevada franchise.
With a proforma enterprise value (EV) of $164 million and a stock price of $0.56, the company’s current valuation at 1.1x projected 2024 sales of $148 million represents a 35% discount relative to the industry average of 1.7x. These figures highlight the company’s undervalued status as per the report.
Want to learn more about valuations, earnings, and investing opportunities? Join us at the upcoming Benzinga Cannabis Capital Conference in Florida at the new Hollywood venue on April 16 and 17, 2024. The two-day event… [continued]
Photo: AI-Generated Image.
