Two days ago, Canada's Supreme Cannabis Company (TSX:FIRE) (OTCQX:SPRWF) released its Q2 results. The news was sure to please investors, as results were solid. Despite this, FIRE stock has been on a steep decline since the previous week, and while the results gave a brief respite from ailing numbers, they haven't been enough to stop the bearish trend.
So what's happening with Supreme Cannabis and FIRE stock? Should investors buck and run or stick around through the tough times?
FIRE Stock
At the time of writing, FIRE stock is selling for $1.79 CAD on the TSX. It is down almost 5% on the day. The current price is a far cry from the high of $2.21, which shares hit just over one week ago.
There is no definitive reason why these shares began to tank on February 7th, but since then, as stated, Supreme released its Q2 results, which should have pleased investors.
FIRE Stock Q2 Results
Results looked like this:
- Revenue came in at $7.72 million representing a 359% increase from the same period one year ago. This was also a 50% increase in Q1 revenue.
The company is also experiencing a decrease in losses, which can only mean good things for investors:
"Q2 2019 net comprehensive loss for the Company was $1.55 million, compared to a net loss of $2.03 million in Q2 2018 and a net loss of $5.39 million in Q1 2019."
Other company news should also have investors jumping for joy. The company raised a further $100 million of capital through a bought deal. It, importantly, began shipping its 7ACRES-branded cannabis to six Canadian provinces. This brand was also named 'Brand of the Year' at the 2018 Canadian Awards.
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Supreme also entered an agreement with Khalifa Kush Enterprises, which should see it spread its international footprint by launching products overseas. Why FIRE stock is not reflecting the potential here is concerning.
Questionable FIRE Stock Action
Despite the solid performance, investors seem divided. It could simply be that Supreme is overlooked due to its much smaller production capacity and market cap in comparison to its peers. In a market dominated by much deeper pockets, it's a tough call banking on the smaller players.
But FIRE stock is worth a look in 2019. The reason is development, or what very possibly could be development down the line. As analyst James Waggoner of PotNetwork puts it:
"The attraction to Supreme is its production, improving the distribution of its key 7ACRES brand and the favorable trends in its operating financials [...] From the December low in prices various cannabis stock indices gained about 50 percent, shares of Supreme gained 86 percent. In January alone SPRWF was the fourth best performing major cannabis stock with nearly a 50 percent spike."
Of course, investors will be wary in a market that is stuffed to the brim with potential plays. 2019 should weed out the companies that will last from the ones that have survived thus far on hype. Let's see if FIRE stock has what it takes to belong to the former category.
Featured Image: Canva
