Toronto, Canada – High Tide Inc. operates as a cannabis product retailer in Canada, the United States, and other countries, aiming to expand its retail network under the Canna Cabana brand. As of January 29th, Canna Cabana operates 163 retail stores, offering value through its discount club.
In addition to its Canadian retail chain, High Tide also owns 80% of three separate cannabinoid brands operating in the United States, the United Kingdom, and other countries. The company also sells cannabis-related accessories through multiple ecommerce sites.
High Tide’s stock has experienced fluctuations after becoming publicly traded on the NASDAQ, but the company has shown aggressive revenue growth, with revenues growing by 36.7% year-over-year in FY2023. Although High Tide’s revenue growth has slowed in recent quarters due to a shift in focus towards generating better free cash flow, the company plans to accelerate store openings in 2024, with expectations to open around 20 to 30 new stores.
The Canna Cabana brand has seen remarkable success, with same-store sales growing by 110% compared to a national retail sales growth of 28% over the past two years. The brand’s discount club strategy has contributed to over 90% of store revenues and has garnered a customer base of over 1.28 million members as of January 29th.
While the company’s revenue growth has slowed, High Tide has continued to show potential, especially with its white label offering in retail stores. However, concerns about profitability have been raised, as the company’s gross margin has decreased, and its GAAP EBIT margin stood near breakeven at -0.5% in FY2023.
Despite these concerns, High Tide has demonstrated potential for growth, with a discounted cash flow model estimating a fair value over double of the current stock price. However, due to the industry’s risk and thin profitability, cautious optimism is advised, with a “buy” rating instead of a “strong buy” rating.