Cresco stock is showing higher volatility this morning and turned 4% lower after rising earlier in the opening session. Investors are reacting negatively despite solid earnings from Cresco Labs (CSE:CL) (OTCQX:CRLBF).
At the turn of the year, many cannabis stocks reached remarkable heights as they got ready to take their businesses to the new level, and one of those was Cresco Labs. By the time April ended, CRLBF stock gained as much as 90% due to the general optimism about the company’s business. However, since then, Cresco stock has given up 24% of its gains. Today, the company announced its financial results for the second quarter and the numbers were definitely promising.
In Q2 2019, Cresco Labs managed to generate revenues of $29.9 million, which reflects a 253% increase from the $8.5 million that the company had generated in the prior-year period. In addition to that, the company also beat the revenues estimates of analysts who had come in at $27.9 million.
However, on the earnings front, the company reported a loss of $3.9 million, which equated to a loss of $0.08 per share. That is a stark difference from the prior-year period when Cresco Labs had managed to generate income of $1.6 million. The adjusted EBIDTA earnings for the period came in at $14.5 million, which is substantially higher than $4.8 million in the prior-year period.
At the time of writing, Cresco stock is down 4% at $8.01 on the OTC market, off the session high of $8.75.
One of the biggest factors behind the soaring revenues was the company’s expansion into Pennsylvania and Illinois. The costs for the period soared to $20.6 million from $3.2 million in Q2 2018, which is why the bottom line worsened significantly.
The biggest thing to look forward to for Cresco Labs is its acquisition of Origin House, which could propel the company into the big leagues quite quickly. Cresco announced that it believes that the transaction is going to be closed by the fourth quarter of this year. The Origin House acquisition will allow the company to expand into California, which remains the most lucrative cannabis market in the country.
Cresco stock is up over 20% year-to-date.
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