VGW Stock Slides Despite New Partnership and Teasing Record Revenue

VGW Stock

Valens GroWorks Corp (TSXV:VGW) (OTCQX:VGWCF) has announced a new partnership with Iconic Brewing, but VGW stock is down 4%.

Valens GroWorks, a Kelowna-based industry leader in cannabis extraction services, has today announced a five-year deal with the cannabis division of Iconic Brewing, a leading beverage innovator in Canada. The partnership will see Valens contribute its expertise in extraction, formulation, and SōRSE™ emulsion IP to the production of cannabis-infused beverages, while Iconic will brand and market the final product across Canada. Despite an agreement to produce at least 2.5 million units, VGW stock is down 4% to $2.76.

"We are thrilled to partner with Iconic Brewing, one of the fastest-growing alcohol beverage companies in eastern Canada, to help create their new line of cannabis-infused beverages [...] To service this agreement, we will be using our proprietary emulsion solution, SōRSE™ Technology, which creates oil-based ingestible products, including beverages, that offer a consistent experience with fast onset and offset," said Tyler Robson, CEO of Valens GroWorks. However, Robson's excitement is yet to rub off on investors in VGW shares.

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Earlier this week, Valens teased the possibility of posting record revenue for the recently ended fiscal third quarter to August 31. According to guidance released on Tuesday morning, the company said it expects revenue for Q3 to be between $16 million CAD and $17 million CAD, nearly double the $8.8 million CAD reported in the previous quarter. These figures are indicative of a significant ramp-up in production to 26,000 kilograms, triple its second-quarter operations. While VGW stock is down today, this is a positive sign should the company meet forecasts.

The demand for cannabis extraction services should rise considerably with the arrival of legalization 2.0 next month. This second wave of legislation relates to cannabis derivative products such as edibles, vapes, and oils, of which cannabis extraction services are a crucial component. While VGW stock is down today, it is still up over 150% for the year to date and should be set for continued growth.

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