Monday was a busy day for iAnthus (OTC: ITHUF), with CEO Hadley Ford addressing several topics important to investors, such as the recent cannabis stock sell off, his company’s build-out plan and a strict focus on cost controls.
On a business update call, Ford also announced a new capital raise, guided to cash flow positive in 2020, discussed expansion plans and made a robust defense of the company’s business model.
Gotham Green Partners invested $20 million in the company as part of a larger $100 million planned financing plan that allows iAnthus to fully execute its anticipated expansions.
The terms of the deal are complex, and we will have more detail in an upcoming article.
IAnthus stock is “down 65% year-to-date. And today, we find ourselves trading at all-time lows,” Ford said.
“This freefall has coincided with an unprecedented amount of short activity in our stock and rumors of our inability to finance the buildout of our key markets.”
A large footprint buildout requires a lot of capital to execute, and Ford said the injection from Gotham Green Partners will allow the company to fully execute all its current plans.
He also noted that “…the market is not reflective of underlying fundamentals in our sector, with our strong sequential revenue growth, improving economies of scale or regulatory catalysts such as the SAFE Act passing through the House of Representatives last week.”
Ford anticipates the company will generate positive cash flow in 2020.
Expense control was also addressed.
“We are redoubling our focus on containing and reducing discretionary spending,” Ford said. “We have a robust budgeting process, and we keep daily account of what cash is coming in and going out.
“You won’t find anyone in our team in the front of the plane.”
But one aspect of the call was surprising: Ford urging listeners to buy iAnthus stock because he believes it’s undervalued.
“Now, we need all of you to take advantage of a stock on sale. Our stock is at an all-time low. Yet, we have more people, licenses, assets and revenues than we have ever had. We have no financing concerns and pro forma for our pending acquisition. We’re run-rating over $10 million a month in reported and managed revenue. We are favorable to our internal budgets, and we’ll be generating cash next year and yet on any valuation metric, absolute for the markets we are in or relative on how we trade versus our peers. We are at a massive discount.”
Stock valuation can be a risky topic for CEOs to address, because so many factors that affect stock price are beyond CEO control.
Why create the potential liability of disappointing investors if, through no fault of the CEO, the stock price doesn’t rise as investors assumed?
More often, the best use of senior management’s time and effort is running their companies to the best of their ability. Clean, consistent execution of a guided business plan is the best antidote for an ailing stock price.
Craig Behnke can be reached at firstname.lastname@example.org.