TILT stock is one of the few cannabis plays that is down year-to-date. Presently priced at $0.95 CAD, shares have lost a whopping 72% in 2019. That kind of loss is almost unheard of in a sector that has seen over 24 companies pack on more than 50% in share gains.
For perspective, the two largest marijuana ETFs, Horizon's Marijuana Life Sciences and ETFMG Alternative Harvest, have returned 21% and 24% respectively to investors over the last year.
TILT Holdings (CSE:TILT) (OTCQB:SVVTF), on the other hand, is worrying analysts and investors alike.
TILT Stock: Not a Favorable Play Right Now
The company was formed via a four-way reverse merger in December 2018. Each member covered a key component of the cannabis industry and involved a Canadian grower, a US dispensary operator, a cannabis-delivery software company, and a customer-relationship software developer. On paper, the company was intriguing, as was TILT stock.
During those days, share traded at approximately $3.70 CAD. However, poor company valuations have sent TILT stock into a spin.
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Here's the most recent issue:
TILT Holdings recently listed its total assets at $541.4 million. However, $145.8 million is recognized as goodwill, and another $210.8 million is recognized as intangible assets. Further, the company's total current liabilities as of March 31, 2018 "was outpacing total current assets by more than $54 million."
In other words, TILT has very little in actual working capital. In fact, whether it will be able to cover operational costs for the next year remains to be seen.
Management will have to source finance from somewhere, and this might mean further stock offerings. TILT stock continues to decline, and it's no surprise.
Back to the Start
In actuality, TILT Holdings' problems were glaring from the beginning. In early December—the day prior to trading publicly—TILT filed a prospectus in Canada showing more than $900 million in pro forma assets, but 80% of this value was actually goodwill. Then the problems grew as The Motley Fool states further:
"An announced change in accounting practices led to a buzz-killing writedown of $496.4 million in the fourth quarter, which in turn led to a more than $552 million annual loss in 2018."
Now, TILT stock is receiving a "sell" rating from several analysts as it continues to decline. A new CEO has come on board recently, but is this enough to rescue this stock? Have you any faith in this cannabis play?
Featured Image: DepositPhotos © jamdesign
