MedMen stock is sinking today after MedMen Enterprises (CSE:MMEN) (OTCQX:MMNFF) released its first-quarter fiscal 2020 results, with revenue falling short of analysts’ expectations.
For the period ended September 28, 2019, MedMen posted a gross profit of $21.8 million USD, but after biological adjustments, this figure is reduced to $17.2 million USD. The real sticking point for MedMen stock and its investors is the revenue figure of $43.9 million USD, well short of the expected figure of $47.7 million USD. Expenses totaled $66.1 million USD, with general expenses alone coming in at $49 million USD or 111% of total revenue. Sales and marketing account for $5.7 million USD during the quarter.
During the quarter, MedMen Enterprises spent $43.9 million USD on operating activities while generating $7.3 million USD on investing activities and $45.1 USD on financing. The LA-based firm’s cash position increased from $33.7 million USD to $42.2 million USD during the quarter as a result. MedMen recently announced that it would lay off 190 staff in an effort to reduce spending to under $85 million USD per annum, but the deadline of the end of 2020 to do so looks unachievable off these results. MedMen stock is down about 10% on Wednesday.
“We entered Fiscal 2020 on a mission to build a more nimble and financially flexible MedMen,” said Adam Bierman, MedMen Enterprises co-founder and Chief Executive officer. “As we right-size our organization and implement an intensified focus on free cash flow generation, our business will become more efficient, in turn allowing us to better serve our stakeholders. Through the successful execution of these goals, we expect MedMen will be EBITDA positive by the end of calendar year 2020.” MedMen stock is currently trading at $0.58.
MedMen Stock Still Sinking
Despite the cannabis market showing signs of a rebound last week, MedMen shares continue to drop against the backdrop of the high level of cash burn at the company. An aggressive expansion strategy into already condensed markets such as Los Angeles and Florida, where recreational cannabis remains outlawed, has yet to bear fruit in terms of profits, which could spell more bad times ahead for the cash-strapped pot firm.
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