Shares in the US's TILT Holdings (CSE:TILT) (OTCQB:SVVTF) have soared since Friday last. In the space of five days, shares have packed on 25% and are now selling for $0.89 CAD.
The stock has much further to climb, however, if investors want to return to the year's high of $3.50 reached at the end of January. Since then, shares have underperformed the broader market and have lost over 70% year-to-date.
It has been a rough year for TILT stock, but investors will take gains where they can, and with shares up 25%, perhaps there is a greater resurge on the way.
TILT Holdings Stock
TILT has been a volatile play from the get-go. A bevy of upsetting announcements stemming from head office has wreaked havoc on this cannabis play, leaving investors angry.
Created via a reverse takeover that involved four companies, TILT's business model was intriguing. The company comprised of four different companies from different sectors of the cannabis industry. Expertise arriving from multiple fields seemed like a great idea. One company was involved in marijuana cultivation, another operated dispensaries in Massachusetts, and a third was engaged in customer relationship software development. The fourth company developed cannabis delivery software.
Initially, there was widespread excitement over this new business venture. However, soon after going public on December 6, things went south.
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A Number of Controversial Releases
So what's gone wrong? Well, many things, unfortunately. TILT's poor performance is not the result of one severe blow to investors, but rather, several in quick succession.
Soon after listing publicly, TILT Holdings filed a prospectus in Canada showing more than $900 million in pro forma assets, but 80% of this value was actually goodwill. Then, when the company's Q4 and fiscal 2018 financial results were released on May 1, it showed that TILT had chosen to write down a sum of $496.4 million, which in turn led to a more than $552 million annual loss in 2018.
In the midst of all this, it was revealed that the company paid out $60 million in compensation to executives. This was at the same time that it was making huge losses. The controversy fueled distrust in management.
The Takeaway
With a current valuation of only $200 million, the issue with TILT Holdings is very clear. With very little in actual working capital, whether the company will be able to cover operational costs for the next year remains to be seen.
At least a 25% climb in recent days gives current investors some hope. However, there is no news attributable to the climb, so, is this a result of a wider-market resurgence? Probably.
Featured Image: DepositPhotos © leungchopan
