KSHB stock is trading sharply lower on Thursday after KushCo Holdings (OTCQB:KSHB) reported a lower than estimated fiscal first-quarter revenue.
The development of the cannabis industry has also led to the development of ancillary industries that service the sector, and one of those is cannabis packaging firm KushCo Holdings Inc. There have been a lot of problems for the overall cannabis industry, and it seems it has now affected KushCo as well.
Vape Crisis Impacted Revenue
The company revealed that the current health scare surrounding vaporizers and tobacco has had a direct impact on the company’s sales figures. This was announced on the same day that the company announced its quarterly earnings.
In the fiscal first quarter, KushCo generated revenue of $35 million, which represents a significant drop from the previous quarter when the company generated revenue of $47 million. Analysts were estimating the company to report revenue of $41.40 million.
The Chief Executive Officer of the company, Nick Kovacevich, stated that the steep decline in sales was brought about by the slowdown in the industry caused by black market vapes.
KSHB stock is down as much as 10% to $1.52.
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The company posted a loss of $12.5 million or 12 cents a share, compared with a loss of $8.6 million, or 11 cents a share in the same quarter of the last year. Analysts were projecting the company to report a loss of 9 cents a share.
KushCo did state that the shortfall in the vape space was somewhat softened by its sales in medical cannabis.
Despite the current troubles with the company, it should be noted that the particular space in which the company is working presents a lot of growth opportunities. As a matter of fact, some experts have said that KushCo Holdings could well prove to be the stock to pick in 2020 due to those growth opportunities.
2019 was a tough year for the entire sector, but most experts believe that the issues related to the industry will not be as great in 2020, and a sector-wide rebound can be expected. If that happens, then KushCo is also likely to see a change in fortunes. Hence, despite the latest setback, investors could do well to continue to monitor KSHB stock in the coming weeks.
Featured image: Canva
