Skip to main content

Organigram Down On COVID-19 Impact, Buying Opportunity In Sight

Tuesday, April 13, 2021 | Thomas Hughes
Organigram Down On COVID-19 Impact, Buying Opportunity In Sight

Lockdowns Cut Into Organigram Revenue 

Cannabis investors that didn't get the message when Aphria (NASDAQ: APHA) reported should pay attention to Organigram (NASDAQ: OGI). The company just reported its worst results since the 2018 cannabis market implosion and has shares down by 10%. The reason is not because of any underlying weakness in the cannabis market, far from it, the reason is because of COVID-19. The pandemic and lockdowns in Canada not only cut into sales but available staff which had an impact on cultivation and sales. As with Aphria, Organigram is expected to rebound from this hit the only questions we have are how soon, how fast, and how high? No pun intended. 

Organigram Revenue Shrinks But The Story Is Bigger Than COVID 

Organigram's revenue shrank in the FQ2 period by 37% YOY. The reason is because of COVID more than anything else but there is more to the story. The company has been losing share in the dried-flower category for the last two years and that is underpinning results. The $14.64 million in revenue is not only down 37% from last year, but last year's results are down 17% from the prior year and there is a noticeable downtrend in revenue in the intervening period.
  • Q2 2021 net revenue was also lower due to missed sales opportunities, as certain employees tested positive for COVID-19 which resulted in a significant number of facility staff having to isolate.
That said, the company has been working to correct that issue by refocusing on growth markets and revitalizing its brands. Assuming Canada can get reopened (it looks like they are, no, reopening) we expect to see revenue growth resume and rebound to pre-COVID levels if not higher. The estimated loss of revenue for Q2 is in the range of $7.00 million or more than enough for a company record. 

Evidence of the revitalization and growth strategy includes new product launches, acquisitions, and new strains of cannabis intended to attract consumers. In total, there have been 62 new SKUs launched in the last 9 months with more on the way. The most recent acquisition is The Edibles And Infusions Company, a purchase that should greatly enhance the number of listings in the #1 edibles category, gummies & chews. 

The fiscal Q1 period produced a net loss of $66.39 million which really isn't a surprise. With sales restricted so severely, the company experienced massive deleveraging of its production facilities but there is a silver lining here. A rebound in sales will re-leverage those same costs with added strength due to the companies revitalization efforts, efforts that include process improvement from the grow-room to the showroom. 

The Technical Outlook: Organigram Down But Not Out 

Shares of Organigram are down about 5% in early trading but already showing signs of support. The stock hit a key support level at $2.00 that retraces the Reddit-inspired rally by 100% and brings the market back to normal. We are not surprised to see support at this level and expect to see a bottom form if not a rebound. The indicators are consistent with support and a possible rebound that could be strong. The MACD is diverging and stochastic extremely oversold which sets the market up for a swing in momentum at least. Based on our view of the cannabis market and the outlook for reopening, the rebound in OGI, when it comes, is going to be vigorous.

Organigram Down On COVID-19 Impact, Buying Opportunity In Sight

Featured Article: Understanding the Price to Earnings Ratio (PE)

7 Stocks to Buy For the Gig Economy

Before the global pandemic, it was referred to as a side hustle—a way for some individuals to make a little extra money. However, as the pandemic has changed the nature of how we work, and as consumers how we spend, the gig economy has become an essential way of life for many workers.

There is much that’s not known about the long-term effects of the pandemic. But if there’s one lesson we learn from history, it’s that there will be ripple effects. We believe that society will get back to something resembling normal. However, what that normal looks like may be different.

Americans were becoming less social since before the pandemic. Now consumers have begun to realize there truly is no reason to leave their house to shop for anything. And while many crave physical connection during these times, there will be many that have changed their purchasing habits for good.

Other elements of the gig economy, such as ride-hailing and home rentals, were devastated due to the pandemic. Those businesses are likely to come back.

And that’s why companies that have created the gig economy aren’t going away anytime soon. In this special report, we’ll highlight several stocks that investors should consider as the gig economy moves forward.

View the "7 Stocks to Buy For the Gig Economy".

Companies Mentioned in This Article

CompanyMarketRank™Current PricePrice ChangeDividend YieldP/E RatioConsensus RatingConsensus Price Target
OrganiGram (OGI)1.6$2.42-0.4%N/A-3.56Hold$4.41
Compare These Stocks  Add These Stocks to My Watchlist 

MarketBeat - Stock Market News and Research Tools logo

MarketBeat empowers individual investors to make better trading decisions by providing real-time financial data and objective market analysis. Whether you’re looking for analyst ratings, corporate buybacks, dividends, earnings, economic reports, financials, insider trades, IPOs, SEC filings or stock splits, MarketBeat has the objective information you need to analyze any stock. Learn more about MarketBeat.

MarketBeat is accredited by the Better Business Bureau

© American Consumer News, LLC dba MarketBeat® 2010-2021. All rights reserved.
326 E 8th St #105, Sioux Falls, SD 57103 | U.S. Based Support Team at [email protected] | (844) 978-6257
MarketBeat does not provide personalized financial advice and does not issue recommendations or offers to buy stock or sell any security.

Our Accessibility Statement | Terms of Service | Do Not Sell My Information

© 2021 Market data provided is at least 10-minutes delayed and hosted by Barchart Solutions. Information is provided 'as-is' and solely for informational purposes, not for trading purposes or advice, and is delayed. To see all exchange delays and terms of use please see disclaimer. Fundamental company data provided by Zacks Investment Research. As a bonus to opt-ing into our email newsletters, you will also get a free subscription to the Liberty Through Wealth e-newsletter. You can opt out at any time.