MedMen Enterprises (CSE:MMEN) (OTCQX:MMNFF) has been in trouble for quite some time, and the disappointment with the company’s recent fiscal second-quarter financial results has resulted in another selloff in MedMen stock.
Disappointing Earnings
MedMen is in the middle of a liquidity crisis, and its cost-cutting efforts do not look effective enough to turn around its fortunes. Over the past year, it has been one of the worst performers among cannabis stocks. The company generated $44 million in revenue in the fourth quarter, and on a year-on-year basis, revenue growth went down by 11%. Analysts had estimated revenue of $65 million.
The losses per share stood at $0.09, managing to stay above analysts’ estimates for losses to be $0.10 per share. MedMen Enterprises was able to cut some of its costs; however, costs on salaries and marketing still stood at $52 million, which has weighed heavily on MedMen stock.
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In the previous quarter, the same expenses had been pegged at $50 million. Experts now believe that if the company cannot cut losses significantly in March, then questions are going to be raised about the competence of the management.
In other words, MedMen stock is expected to be a loss-maker in the long-term if drastic changes are not implemented by the management. It is believed that if the company can raise more capital, then it could start a rebound. One of the strategies that the company's newly appointed Chief Executive Officer, Ryan Lissack, is looking at is an exit from the cannabis production aspect of the business.
MedMen Enterprises wants to instead concentrate on its retail stores. This would be a significant step, but it remains to be seen if the company can execute it.
Featured image: Canva
