TGOD Stock Down a Worrisome 54% from Its Year-Ago Period

TGOD stock

Losing money in the stock market happens. Taking the occasional hit is part of the game. But for those who invested in The Green Organic Dutchman (TSX:TGOD) (OTCQX:TGODF) this time last year, their investment has already lost 54%—that is, of course, if they still hold their shares. The sentiment is only worsened by the fact that the decline has sped up; TGOD stock is down 31% in the last three months.

What's happening with one of cannabis's biggest names?

TGOD Stock: Why So Bearish?

The Green Organic Dutchman is still not a profitable company, but to be fair, neither are most of its peers. It's simply too early for significant profits in Canada's less-than-one-year-old legal cannabis industry.

So without profits, it is unlikely that the company will show any correlation between its share price and its earnings per share (EPS).

This leads investors to look at revenue growth. And in TGOD's most recent Q1 earnings report (released mid-May) the company showed revenue growth up 28% sequentially. This reflected an average of $2.4 million CAD for the quarter. While a rise of 28% is undoubtedly positive, a significant problem with "cash-burning" remains, and this is likely why TGOD stock has dropped significantly in recent months.

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The company reported a net loss of $14.1 million in Q1. Comparatively to what it took in, it doesn't take a genius to see that TGOD is losing money fast. There is one silver lining to take away from this though; net loss was lower by $4 million as compared to the sequential quarter.

The Positives of TGOD Stock

The Green Organic Dutchman attributed this lower loss toincreasing sales in Poland and stronger net results from Epican in Jamaica rolling into TGOD’s financials.” In addition, it said it had a “disciplined approach to operational costs.”

And it seems Poland may be a serious silver lining for TGOD, with most of its revenues coming from its HemPoland subsidiary. The company is reaping the benefits of the European CBD hemp market, and this is likely to be TGOD's biggest revenue driver in the near term.

Further, TGOD only began sales in Canada at the end of Q1. As such, most of these revenues won't be material until the second quarter.

If investors are willing to brave this storm, TGOD stock shows potential for the future, but expecting more losses in the near term is probably a safer bet.

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