Is Curaleaf a Buy?
Times are hard for American cannabis businesses like Curaleaf (OTC: CURLF). Thanks to the bear market and the end of the marijuana market's "gold rush era," its shares fell by more than 50% in the last 12 months. But considering that the industry-tracking AdvisorShares Pure U.S. Cannabis ETF crashed by an even more ghastly 70%, there's reason to believe that the market's expectations for Curaleaf are a bit higher than for the industry itself.
Is this stock on its way to a rebound in 2023, and if it is, should investors buy it? Let's take a sober look at its state of affairs to find out.
There are a few upcoming headwinds that'll put more pressure on the company's top line, which totaled $340 million in Q3 of 2022 and grew by 7% year-over-year. The most dangerous headwind for investors is that much of the U.S. adult-use cannabis market is becoming increasingly saturated by marijuana products that are being sold from ubiquitous and largely interchangeable dispensaries. That's driving selling prices down, as supply is higher than demand for products. At the same time, no individual retailer appears to have any kind of competitive advantage that would bring customers back and protect a company's market share. Of course, the state of the market isn't Curaleaf's fault, but it's a fact of life which will likely lead to compressed margins and perhaps even a contracting base of revenue for a year or so.
Source Fool.com
