Many cannabis stocks may have recovered over the past few weeks, but the same cannot be said about Zenabis Global (TSX:ZENA) (OTCPK:ZBISF). Over the course of the past year, Zenabis stock has been one of the worst performers among cannabis stocks after having tanked by as much as 96%.
Weak Operational Performance
In 2020 so far, Zenabis stock has fallen over 25%. The decline in the stock started this month after the company provided an update with regards to its operational performance. While it is true that the company’s cultivation activities grew, Zenabis also revealed that in order to reduce its spending, it is going to delay the expansion of a facility.
That update resulted in a selloff in Zenabis stock, and the company has been struggling since. While it is true that Zenabis Global has struggled in recent times, the company gave itself some legroom by partially converting some of its debt earlier this month.
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Zenabis had $17.6 million worth of secured debt in its books, but it reached an agreement with the lender by way of which $6 million would be converted into shares. This is a significant development for the company since the debt is going to be due in June this year, and Zenabis now has a greater chance of actually being able to pay it off.
Poor Earnings
Back in November, the company announced its financial results for the third quarter. Zenabis Global reported cannabis sales of C$7.1 million in the quarter, which reflected a marginal decline from the second quarter sales haul of C$7.3 million. That being said, the sales figures in the propagation segment fell significantly to C$4.5 million from C$17.4 million in the second quarter.
Zenabis stated that the timing of customers’ orders, seasonal issues, and growing cycles account for the alarming decline. In the same quarter, the company’s gross margins were C$5 million, and expenses were pegged at C$18.9 million.
At the time of writing, Zenabis stock is down 1% and trading at a new 52-week low of C$0.13.
Featured image: Canva
