TGOD stock is down over 6.5% during Monday morning trading after The Green Organic Dutchman (TSX:TGOD) (OTCQX:TGODF) updated investors on a revised construction timetable for its facilities if it was unable to obtain financing on reasonable terms. The revised schedule means TGOD will significantly scale back its expected 2020 production capacity as the company still strives for profitability in the second half of the year.
TGOD Stock Hits 52-Week Low Amid Valleyfield Uncertainty
While The Green Organic Dutchman's Ancaster greenhouse is complete, and its processing facility at the same site is about five weeks from material completion, its flagship Valleyfield, Quebec site will now be segmented into smaller phases in order to increase cash flow in 2020. The expected completion date of the Valleyfield site is now uncertain and dependent on changing market conditions. TGOD stock has been in decline since early September when Aurora Cannabis (TSX:ACB) (NYSE:ACB) sold its remaining stake in the company.
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As a result of the incompletion of the Valleyfield site, TGOD has been forced to review its projected production capacity for 2020. The Green Organic Dutchman now says it will produce 20,000 to 22,000 kilograms next year, a sizeable decline from the previous figure of 147,500 kilograms previously forecasted. The company now estimates that it will need between $70 million CAD and $80 million CAD by the end of Q2 next year. TGOD stock dropped to a 52-week low of $0.82 following the update.
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"With the current Canadian legal market being smaller than initially anticipated, mainly due to a slow rollout of retail locations in key provinces, we believe that our revised plan will allow TGOD to right-size its production to capture the organic segment, while maintaining optionality to quickly accelerate and expand as more retail locations begin to open," said The Green Organic Dutchman CEO Brian Athiade. Analysts are predicting the lack of storefronts to wreak havoc on pot stocks across the board, with TGOD stock down over 85% in the first year of legalization.
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