High Tide Inc (OTCMKTS: HTDEF) is staring at a major correction after plunging to all-time lows. The company reporting a 234% increase in sales could as well be the catalyst that will fuel a spike from current lows.
High Tide Price Analysis
In addition to strengthening the stock’s market sentiments, sales growth underscores underlying growth expected to continue strengthening investor confidence in the stock. High Tide balance sheet has also received a significant boost on the company closing an $8.4 million convertible debenture offering.
Unlike the first quarter, Q2 has been a flurry of activities as High Tide continues to affirm its prospects in the industry. The company has already secured licenses and authorizations from AGCO that paves the way for it to open Canna Cabana-Branded stores in Hamilton and Sudbury.
Recent price action does not paint an accurate reflection of High Tide long-term prospects in view of recent developments. With the stock flirting with the $0.33 level, it might as well have hit a bottom and due for a correction higher.
After the recent plunge lower, High Tide is staring at the $0.34 as the immediate resistance level, standing on its way to bottoming out. For the stock to turn bullish after the recent slide, it would need to rally and find support above the $0.38 mark, which happens to be a critical resistance level.
Above the $0.38 mark, the stock would be well positioned’ to make a run for 52-week highs of $0.44. Conversely, below the $0.38 mark, High Tide remains susceptible to further drops given the underlying bearish trend.
About High Tide
High Tide is a vertically integrated cannabis company engaged in the design, manufacturing, and distribution of cannabis accessories among other alternative lifestyle products. The company also retails cannabis products for both medicinal and recreational use.
Why is High Tide a Bounce Back Play?
High Tide is a potential bounce-back play in view of recent developments likely to strengthen the stock’s sentiments in the market. The company is fresh from reporting $441,000 in system-wide gross revenue for sales between April 19 and April 23, representing a 234% increase compared to the same three-day period last year.
The sales were generated from the Company’s Canna Cabana branded stores in Alberta. The company also generated significant sales through its newly acquired Grass city e-commerce website
“It was incredible to make history by selling cannabis and accessories across Canada on the first 4/20 after the legalization of recreational cannabis for adult use. […] Other notable achievements on 4/20 were Sales of $72,000 at Canna Cabana Hamilton, $43,000 at Canna Cabana Sudbury and $39,000 on Grasscity.com,” stated CEO Raj Grover.
Buoyed by the sales growth, High tide is planning to open a third cannabis retail location in Yonge Street Toronto as it seeks to take advantage of the growing demand for cannabis products. In Alberta, the company operates 10 Canna Cabana branded retail stores and one franchise. It also boasts of 13 smoker’s Corner accessories shops across Alberta, Nova Scotia and British Columbia.
High Tide is also in the process of completing two pending cannabis retail, business acquisitions. The acquisition drive should not face significant challenges, given that the balance sheet has received an $8.4 million boost, on the closing of a Convertible Debenture Offering.
High Tide is planning to close a second and final tranche offering that could result in the gross proceeds of as much as $15 million, increased from $10 million on keen investor interest.
“The net proceeds of the Offering will be used by the Company to fund the construction of Canna Cabana, KushBar and Smoker’s Corner stores, complete strategic acquisitions as well as for general working capital purposes,” High Tide in a statement.
What Next For High Tide
High Tide is increasingly investing in expanding its footprint in the burgeoning Canadian cannabis marketplace. The closing of debenture offering leaves the company well financed to oversee the construction of Canna Cabana, Kushbar and Smoker’s Corners stores.
A 234% increase in sales over three days also underscores the strong demand that the company’s products continue to elicit in the market. A plunge to all-time lows does not accurately reflect the company’s long-term prospects.
For that reason, High Tide is a potential bounce-back play in light of recent developments.
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Disclosure: We have no position in HTDEF and have not been compensated for this article.
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