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BenzingaEditorial

The Cannabis Industry Is Hoping for a Green Christmas

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COVID-19 plunged the economy in a crisis like no other, testing the resilience of the retail industry. Many have suffered great loss, some are struggling just to remain above waters but some have also managed to adapt by innovating. Consumer shopping behavior and preferences have changed for good. This remote and contactless environment was a difficult for cannabis retailers to adapt to. Village Farms International (NASDAQ:VFF), GrowGeneration (NASDAQ:GRWG) and even the much-maligned Aurora Cannabis (NYSE:ACB) delivered fantastic gains in November, with their shares more than doubling.

 

The favorable factors

Marijuana stocks overall enjoyed a boost from the U.S. elections that took place on November 3. Additionally, the election of a Democratic candidate could signal a friendlier federal stance when it comes to marijuana. Voters of Arizona, Montana, New Jersey, and South Dakota residents chose to legalize recreational marijuana whereas of Mississippi and South Dakota approved the initiatives to legalize medical cannabis.

Winner #1 – Aurora

Aurora Cannabis ranked as the top pot stock of the month as its shares skyrocketed nearly 186%. Despite still losing market share in Canada’s recreational marijuana market, Aurora posted better-than-expected fiscal 2021 Q1 results at the beginning of November. While predicting a revenue in the range between CA$60 million and CA$64 million in Canadian dollars, it generated net revenue of CA$67.8 million. The Canadian producer stated it’s on track to generate positive adjusted EBITDA in its upcoming quarter, Q2 of FY21.

Winner #2 – Village Farms International

Village Farms International stock soared nearly 144% higher last month and its numbers were a lot better than Aurora’s, with strong revenue growth and a small profit in Q3.

But even more important for its long-term outlook was its full acquisition of Pure Sunfarms, a joint cannabis venture it formed with Emerald Health Therapeutics. Throughout November, Pure Sunfarms added several jewels to its crown. It received a license to conduct sensory evaluation trials for cannabis from Health Canada, it launched new CBD products in Hong Kong, and signed a medical cannabis supply agreement with Shoppers Inc.

Winner #3 – GrowGeneration

Shares of the biggest specialty hydroponics and organic gardening retail chain in the U.S jumped 110% in November. The votes to legalize marijuana in several states should create growth opportunities for the company. GrowGeneration’s growth prospects were already impressive prior to Election Day as it reported sizzling growth in Q3. Revenue soared 153% YoY to $55 million. Earnings increased 133% YoY to $3.3 million with part of this growth being attributed by its acquisitions. However, the company’s same-store sales rose 73% YoY year to $33.4 million, showing that it isn’t just acquisitions fueling GrowGeneration’s growth.

The most wonderful time of the year

Mitch Baruchowitz, managing partner at a New York-based private equity firm from the sector, Merida Capital Holdings, forecasts this holiday season’s sales will be the highest ever. Several factors support his belief. Legislation that is evidenced by recent ballot wins in both right and left-leaning states is opening new markets to millions of potential consumers. Moreover, cannabis purchases do have some seasonality, with holiday purchases growing over the past few years according to Headset, an industry research group. To meet holiday demand, some dispensaries are creating specialty products and holiday bundles that specifically target consumers looking for limited edition items or gifts, according to Baruchowitz.

2020 Thanskgiving Green Wednesday was a hit

The 2020 Green Wednesday blew sales records for several sellers. Lantern, a cannabis e-commerce marketplace and on-demand delivery service, cited an 87% increase in basket size compared to last year. Ganja Goddess, a California-based online shopping and delivery service in California, cited a 130% increase in sales compared to last year. Jane Technologies, Inc, an online cannabis marketplace partnering with more than 1,600 dispensaries and brands in 33 states, registered a 241% increase in online sales compared to last year’s figure.

Switching to e-commerce isn’t as easy as flipping a switch

Despite the wide availability of credit cards and online payments, credit card companies often choose not to service the cannabis industry because of its high risk and reputation. But instant purchases using digital wallets and PayPal (NASDAQ: PYPL) are gaining acceptance and popularity among cannabis consumers. The transition from traditional to digital forms of payment is necessary for the normalization and evolution of the cannabis industry.

Outlook

The industry is seeing a spike in acceptance of contactless shopping from both consumers and retailers during the pandemic. But the long-lasting impact of the pandemic on the society is yet to be seen. Many of the habits that we created during this unprecedented year are not going away any time soon. Though unexpected, Covid-19’s role in changing consumer purchasing behavior has forced the much-needed innovation across the economy and the cannabis industry is no exception. Based on existing data and developments, a green Christmas could be in store.

This article is not a press release and is contributed by a verified independent journalist for IAMNewswire. It should not be construed as investment advice at any time please read the full disclosure. IAM Newswire does not hold any position in the mentioned companies. Press Releases – If you are looking for full Press release distribution contact: press@iamnewswire.com Contributors – IAM Newswire accepts pitches. If you’re interested in becoming an IAM journalist contact: contributors@iamnewswire.com

BenzingaEditorial

FedEx Is Struggling To Shake off the Pandemic-Domino Effect

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On Tuesday, parcel delivery company FedEx Corporation (NYSE: FDX) reported a decline in quarterly profit along with cutting its earnings outlook due to higher costs and labor shortages. Upon the news, its shares declined more than 4% in after-hours trading.

Figures

For the quarter that ended in August, revenue rose 14% to $22 billion which was in line with Refinitiv survey of Wall Street analysts. But net income slid to $1.1 billion, or $4.09 a share, below FactSet expectations of $4.88. During the same quarter last year, it earned $1.25 billion, or $4.72 a share, translating to an 11% drop in profit. Excluding restructuring and integration expenses, per-share earnings become $4.37. The tight labor market increased spending to by $450 million as FedEx needed to pay more overtime and raise spending to attract workers while it also needed to spend more on transportation. Salaries and employee benefit expenses alone rose 13%, including 27% in its Ground division. Moreover, shipping demand unexpectedly slowed due to supply-chain disruptions as the current labor environment is driving operational inefficiencies that are dragging down financial results.

Outlook

Tennessee-based delivery giant expects FedEx further downgraded its per-share earnings forecast that it issued in July. Per share earnings before certain accounting adjustments for the fiscal year that started in June are expected to be in between $18.25 and $19.50

Failed attempt to offset higher costs

Like United Parcel Service, Inc (NYSE: UPS), FedEx raised prices and imposed surcharges to offset higher costs associated with the surge in demand as the volume of commercial ground and express packages rose. However, supply chain disruptions slowed domestic parcel demand in the US compared to last year.

On Monday, FedEx announced it will raise its rates 5.9% on average at the beginning of 2022. This is the highest annual increase both FedEx and United Parcel Services Inc. have implemented over the last eight years. But both shipping companies instituted new fees and raised rates on customers as the environment has provided them with increased pricing power.

FedEx’s struggles aren’t going away

According to its Chief Operating Officer Raj Subramaniam, the consequences of a constrained labor marketscontinues to weigh heavily on operations and consequently, financial performance. In an effort to catch up, the company is diverting 25% of the volume bound for its troubled Portland hub to other locations, adding trucking routes and hiring assistance from third-party transportation companies. About 600,000 of its packages a day are being rerouted in attempt to address these network bottlenecks.

The problem is that disruptions are hampering the entire supply chain, from factories starving for parts to congested ports and railroads. Online sales are also taking as consumers shop in store or pick up their orders themselves.

UPS is ahead

On one hand, FedEx picked up some business from UPS as the company was cutting ties with some customers to focus on more profitable business. On the other, it lost customers such as Clean Eatz Kitchen Inc. due to delays that costed the company thousands of dollars worth of shipments of ready-to-eat frozen meals that ended up spoiled. Recently, the company shifted all its business to UPS, saying that on-time delivery rates are in the high 90s after it made the switch.

Even more challenges ahead

FedEx is facing these challenges only weeks before the busiest time of the year for the industry, the Christmas time. Similarly to last year, the company aims to hire 90,000 workers to help with the holiday rush. But merchants and retailers are facing another hard year shaped by shipping capacity. According to ShipMatrix estimates, US shipping demand will be greater than the available capacity by 4.7 million parcels a day, both throughout November and December. Although it is significantly less than last year’s 7.3 million shortfall, millions of packages are still at risk of not being on time for Christmas unless consumers shop early. FedEx is clearly struggling with higher labor costs, as well as the fact that pandemic-induced e-commerce boom has slowed down.

This article is not a press release and is contributed by a verified independent journalist for IAMNewswire. It should not be construed as investment advice at any time please read the full disclosure. IAM Newswire does not hold any position in the mentioned companies. Press Releases – If you are looking for full Press release distribution contact: press@iamnewswire.com Contributors – IAM Newswire accepts pitches. If you’re interested in becoming an IAM journalist contact: contributors@iamnewswire.com

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BenzingaEditorial

Robinhood Is Making a Long-Awaited Move

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On Monday, Bloomberg News reported that Robinhood Markets Inc (NASDAQ: HOOD) is making a long-awaited move as it is testing a crypto wallet feature for its app which would allow its customers to send and receive digital currencies.

The company’s team is very much at work as evidence appeared in the software beta version of its Apple Inc (NASDAQ: AAPL)-owned iPhone app in the form of a hidden image portraying a waitlist page for users to sign up for the feature, with the app having a code for cryptocurrency transfers as it’s already possible for Robinhood customers to buy and sell popular cryptocurrencies, including ethereum and dogecoin along with bitcoin. But this time, they will be able to manage all of their crypto holdings through a wallet in the app, without converting them into dollars. Its industry peers such as Coinbase Global Inc. (NASDAQ: COIN) already offer their own crypto wallets which offer a single place for customers to store all virtual currencies which are protected by a private key.

Crypto wallet is a priority

On the latest earnings call, the CEO Vlad Tenev already mentioned that this feature is a priority for the company’s developers. However, being able to deposit and withdraw cryptocurrencies on a large scale is complex the company wants to make sure the process is done correctly.

He didn’t disclose any dates regarding the launch, but the support and testing in its app suggest a debut could be in the near future.

Second quarter earnings

During the quarter that ended in June, revenue more than doubled to $565 million due to a massive surge in crypto trading. They surged more than 131% in the period from $244 million a year ago.

Crypto trading alone brough in $233 million to the revenue table which is more than half of all the transaction-based revenue of $451 million. Cryptocurrency’s share of revenue jumped from first quarter’s 17% to more than 51%.

Unfortunately, the bottom line was a net loss of $502 million, or $2.16 per share. Costs that arose from the change in fair value of convertible notes and warrant liability took out $528 million from equation whose end result was significantly different compared to a profit in the same quarter last year.

Outlook

When it announced its latest results, the company also warned of seasonal headwinds and lower trading activity across the industry that it expects to result in lower revenues for the quarter that will end on September 30th, 2021, along with considerably fewer new funded accounts compared to the June quarter.

There is also the volatility of crypto to consider as the company makes money on this front by routing orders to market makers that the company claims to offer “competitive pricing”. Its revenue is the percentage of the order value and regulators are already questioning this model.

Regulatory hurdles

Regulators are questioning Robinhood’s controversial pivot into cryptocurrency markets. As a result, the company paid a $65 million penalty to the SEC in part for failing to satisfy its duty of “best execution”. U.S. lawmakers are questioning the SEC about when it intends to place further restrictions around the practice, so Robinhood shareholders are bound to get nervous as they wait for the outcome.

But even if the practice does not get altered, the question arises as to how much can Robinhood grow if it’s limitedto the U.S., considering that expanding to markets like the U.K. or Europe would imply abandoning the zero-commission model.

The verdict – risk could outweigh the reward

Robinhood’s shares have had a wild ride since it the company’s NASDAQ debut at the at the end of July. Democratize the market for amateur investors is a big deal as technology is constantly changing the way consumers purchase goods and services but app-based investing has a much stronger impact on young people’s finances. Robinhood did a great job by plugging in tens of millions of first-time investors into the financial markets through their smartphones in a simple and user-friendly way. It deservedly became the poster child of this revolution. Despite the latest report quarter which portrayed strong results, the question is how long can the good times last as the company is facing an increasing amount of regulatory hurdles which could easily result in the risk outweighing the rewards.

This article is not a press release and is contributed by a verified independent journalist for IAMNewswire. It should not be construed as investment advice at any time please read the full disclosure. IAM Newswire does not hold any position in the mentioned companies. Press Releases – If you are looking for full Press release distribution contact: press@iamnewswire.com Contributors – IAM Newswire accepts pitches. If you’re interested in becoming an IAM journalist contact: contributors@iamnewswire.com

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BenzingaEditorial

One Way or Another, Rivian Could Make History

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Until this month, the U.S. had only one all-electric automaker, the all-mighty Tesla Inc (NASDAQ: TSLA).  Last week, Rivian Automotive Inc. rolled its first pickup truck for regular customers off its assembly line in its Normal, Illinois plant with first deliveries just around the corner. Rivian is doing much more than challenging Tesla- it is delivering the world’s first all-electric pickup truck.

Besides legendary automakers transforming their models for the electrification era, there are also many electric start-ups in the race to deliver a mass-market EV such as Lordstown Motors (NASDAQ: RIDE) but unlike all of them, Rivian is, after a dozen years of effort, on the verge of actually doing it. No wonder that Ford Motor (NYSE:F) invested $500 million back in 2019 and Amazon.com Inc (NASDAQ: AMZN) ordered 100,000 delivery vans to be shipped in stages through 2030. This July, both Ford and Amazon raised their anties, leading a second, $2.5 billion investment round.

The electric pickup is almost here- and it’s like nothing we’ve ever seen

Two weeks ago, Motor Trend reviewed Rivian’s R1T and it was everything but disappointed as it named it “the most remarkable pickup we’ve ever driven.”

Rivian’s $67,000 pickup will soon be accompanied by two rivals on the road: the electric version of America’s bestselling Ford’s F-150 named the Lightning and Tesla’s Cybertruck. But by the end of the year or perhaps even longer, Rivian will have the roads all to itself.

Besides being America’s favorite vehicle, electrifying pickups is a big deal for the fight against climate change as today’s ICE versions of prodigious drinkers of diesel and gasoline. According to Chris Harto, a policy analyst at Consumer Reports, the gains in reducing emissions will be much larger compared to shifting from a Toyota Motor (NYSE: TM) Prius to General Motors’ (NYSE: GM).

2022

Rivian’s electric adventure vehicle will be challenged by many more competitors whose debut is scheduled for 2022 such as Atlis Motor Vehicle’s tech-advanced XT and Hercules Electric Vehicules’ Alpha pickup that will bring luxury into the equation.  Both vehicles will be equipped by Worksport Ltd’s (NASDAQ: WKSP) revolutionary solar-powered technology TerraVis.

The road ahead

If Rivian thrives, it will be much more than a quiet ride to historic glory as it will be only the third American automaker in a century to not to die by bankruptcy. The others are Chrysler that was founded in 1925, and Tesla itself in 2003. Additionally, last Wednesday CNBC reported that Rivian is planning its public debut later this year, pegging the company’s value up to $80 billion. If correct, it could end up being one of the biggest US IPOs in a decade. Therefore, this EV startup has more than one way to enter history.

This article is not a press release and is contributed by a verified independent journalist for IAMNewswire. It should not be construed as investment advice at any time please read the full disclosure. IAM Newswire does not hold any position in the mentioned companies. Press Releases – If you are looking for full Press release distribution contact: press@iamnewswire.com Contributors – IAM Newswire accepts pitches. If you’re interested in becoming an IAM journalist contact: contributors@iamnewswire.com

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