Curaleaf Holdings (CSE:CURA) (OTCQX:CURLF) is now firmly established the biggest multi-state cannabis operators in the United States, and it has expanded its footprint to 17 states in the country. As such, it is also one of the better-known stocks in the cannabis space. That being said, the coronavirus pandemic has come as a major blow.
Several industries are now in crisis, and it is more pronounced for the cannabis industry since many companies were already struggling with the cash crunch. In such a situation, it could be worthwhile to figure out if Curaleaf is worth investing in.
The company posted its financial results for the fiscal year 2019. Revenues grew from $77.1 million to $221 million, and while the growth is impressive, it is Curaleaf’s widening losses that could a cause for worry. Net loss rose by 13% to hit $69.8 million, and SGA (selling, general and administrative) costs jumped to $121 million from $65.3 million.
Cash balance depleted to $42.3 million from $266.6 million in 2018. Investors could hope to get an updated idea of the situation later on in May when Curaleaf announces its Q1 2020 financial results. However, it is almost certain that 2020 is going to be a challenging year for the company.
Curaleaf may have grown at an impressive pace, and with 53 dispensaries under control, the company is now the biggest cannabis operator in the United States. However, such size can prove to be counterproductive in the current environment, and it is believed that leaner operations could well prove to be more efficient. The scale of the operations may have been impressive prior to the coronavirus crisis.
That being said, the company could well manage to become a major player in the long term, and if cannabis is legalized at the federal level in the United States, then the payoff could be huge. Yet, investors also need to keep in mind that Curaleaf is also suffering from a cash crunch, and in order to stay in the game long enough, it would need access to capital. Hence, it could be prudent for investors to stay away from the Curaleaf stock at this point.