Read on Twitter
$MSOS profitability vs.
LPs big board effect:Last Q annualized totals:
Top 9
MSOs (in USD):$45.6B EV
$3.4B Revs
$1.0B aEBITDA
Top 9 Big Board
LPs (in CAD):$55B EV
$1.7B revs
($484M) aEBITDA
Price 02/15/21, sorted by EV, with '21 & '22 multiples
Source: BMO, SEDAR
9MSOs: $CURLF $GTBIF $CRLBF $TCNNF $TRSSF $AYRWF $CCHWF $HRVSF $JUSHF
9LPs: $WEED/ $CGC $TLRY $APHA $CRON $SNDL $ACB $VFF $HEXO $OGI
Fwd Multiples:
CY'21:
EV/Rev: 8x
EV/EBITDA: 27x
EV/Rev: 20x
EV/EBITDA: 98x
CY'22:
EV/Rev: 6x
EV/EBITDA: 17x
EV/Rev: 14x
EV/EBITDA: 90x
9LPs: $WEED/ $CGC $TLRY $APHA $CRON $SNDL $ACB $VFF $HEXO $OGI
Fwd Multiples:
CY'21:
EV/Rev: 8xEV/EBITDA: 27x
EV/Rev: 20xEV/EBITDA: 98x
CY'22:
EV/Rev: 6xEV/EBITDA: 17x
EV/Rev: 14xEV/EBITDA: 90x
This peer comp table attempts to highlight the discrepancy between MSOs & LPs on key differentiators:
MSOs have:
-2x cannabis sales last Q
-delivering 30% EBITDA Margin
-generating +CF from ops
-minimal net losses despite high cost of capital & punitive 280e tax on gross profit
MSOs have:
-2x cannabis sales last Q
-delivering 30% EBITDA Margin
-generating +CF from ops
-minimal net losses despite high cost of capital & punitive 280e tax on gross profit
$MSOS bulls tout the generational opportunity in play for public #cannabis operators as a long-term investment thesis. Analysts see a $100B+ industry forming by the end of this decade. With a burgeoning TAM, profitability, & catalysts afoot, the thesis has never been stronger.
#cannabis operators as a long-term investment thesis. Analysts see a $100B+ industry forming by the end of this decade. With a burgeoning TAM, profitability, & catalysts afoot, the thesis has never been stronger.
Unlike LP counterparts, MSOs can't expense SG&A or Interest expenses, leading to 50%+ effective tax rates. Double digit lending still reigns. Despite these challenges, all 9 have +EBITDA, many in $MSOS generate cash flow, w $TCNNF, $GTBIF (+ $CXXIF) producing earnings last Q.
Major regulatory catalysts to come include:
-SAFE banking act
lower cost of capital
-uplist to big boardsinstitutional access
-STATES or MORE legislation
-repeal of 280e
-'Goldilocks' scenario potential in play
-SAFE banking act
lower cost of capital-uplist to big boards
institutional access-STATES or MORE legislation
-repeal of 280e
-'Goldilocks' scenario potential in play
Some potential risks include:
-50/50 senate stalemate on +reform
-FDA interference
-decriminalizationstrengthening illicit market
-legalization eroding first-mover advantages or dissipating moats
-federal tax rate increase from 21% and/or 280e remaining status quo
-macro reset
-50/50 senate stalemate on +reform
-FDA interference
-decriminalization
strengthening illicit market-legalization eroding first-mover advantages or dissipating moats
-federal tax rate increase from 21% and/or 280e remaining status quo
-macro reset
There will be significant consolidation by the time all is said & new players not yet in play will emerge. Although $MSOS appear an asymmetrical play for those that execute, Tier 2/3 arguably provide greater risk/reward. Capital flowing to Tier 1s & those who deliver results.
$MSOS see a massive total addressable market still largely untapped, considerable regulatory catalysts near term, & remarkable execution to-date.
LPs have completely failed to deliver results & are faced with a 1M kg oversupply in a smallmarket.
Place your bets. #MSOGang
market still largely untapped, considerable regulatory catalysts near term, & remarkable execution to-date.LPs have completely failed to deliver results & are faced with a 1M kg oversupply in a small
market.Place your bets. #MSOGang
