TGOD stock has been under selling pressure since the beginning of October amid growing pessimism in the broader cannabis sector. Hence, it is worthwhile to have a closer look at what exactly happened to The Green Organic Dutchman (TSX:TGOD) (OTCQX:TGODF).
Many cannabis stocks may have started the year with a bang, but since February/March, it has been a tough period for the sector at large, and many stocks fell off the cliff. The same happened with TGOD stock as well, and so far in October, it bled more as it crashed by as much as 35%.
Although many of the biggest names in the sector saw their stock prices decline, The Green Organic Dutchman’s decline was much more than the rest of the market.
Raising Fresh Capital
Back on October 9, the company announced that its plans of issuing bonds for raising fresh capital had failed. The Green Organic Dutchman had been in talks with a commercial bank, but the whole thing eventually collapsed, and the company stated that it was due to changing market conditions.
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TGOD finished the previous quarter with $68.72 million in cash and was looking to raise debt in order to further expand its business. Amidst all that, the only positive news for the company was the fact that its Ancaster facility is on the verge of completion and has already been certified by Health Canada.
At the time of writing, TGOD stock is up 2.50% to $1.31 on the TSX.
That being said, it is quite clear that the failure to raise capital through the bond issue is going to create difficulties for The Green Organic Dutchman. The legalization of new products in Canada later on this year is a huge opportunity for most of the bigger companies in the industry. However, in order to take advantage, TGOD would need to expand its product line up significantly, and that is where the extra capital could have helped.
Moreover, the company also stated that it is going to explore the possibility of changing the construction schedule of the Ancaster plant in this situation. This failure to raise capital could well have been the reason behind TGOD's recent stock performance.
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