Canadian medicinal and recreational cannabis provider OrganiGram (NASDAQ:OGI) isn’t the biggest competitor on the market, but it’s definitely one of the more interesting ones. The price action of OGI stock lately has also been quite “interesting,” and by that I mean exceptionally volatile.
We’ll definitely delve into OGI stock’s price movements, which simply cannot be ignored. Yet, I would encourage investors not to become distracted by short-term price movements.
In the long run, the health of the company itself is far more important. Is OrganiGram demonstrating improvement in its revenues?
Answering that question will help us make better-informed decisions about whether or not to hold OGI stock over the course of its sizable ups and downs.
A Closer Look at OGI Stock
For much of 2020, OGI stock chugged along at $1 and change. There were attempts to hold the stock above $2, but the bulls simply couldn’t maintain that level.
Things changed dramatically in early February of this year. With hardly any warning, OGI stock skyrocketed to a stunning 52-week high of $6.45 on Feb. 10.
If that was the pop, then soon afterwards came the inevitable drop. Just two days later OGI stock closed at $3.75. Some folks have suggested that Redditors caused the surge-and-purge by targeting cannabis stocks recently.
That may or may not be the case. Either way, we can at least say that OGI stock broke above the previous $2 resistance point this year. The bulls will want to watch that level carefully and do whatever it takes to keep OGI above it.
Follow Reddit? You’ll Regret It
As an investing strategy, I don’t recommend trying to anticipate what Reddit users will do next. Maybe they’ll decide to pump up the OGI stock price, or maybe they won’t. Who can really predict these things?
Besides, message-board users can’t be solely responsible for the movement in a stock. Surely, there are other factors involved.
For instance, the President Joe Biden administration’s favorable stance towards cannabis-law reform is undoubtedly a contributing factor to the recent breakout of OGI stock.
On top of that, local efforts to reform cannabis laws are gaining traction. For instance, Connecticut Governor Ned Lamont included in his budget proposal a plan for marijuana legalization.
Meanwhile, New Mexico Governor Michelle Lujan Grisham pushed for reform as the state’s House Health and Human Services Committee approved a marijuana legalization bill on Feb. 15. The bill will now proceed to other committees, and perhaps a full on vote.
OrganiGram is a Canadian company, but the OGI stock price will be impacted by the market’s general sentiment on the direction of cannabis-law reform throughout North America. And at the moment, it appears that progress is afoot in that regard.
Results, Not Price
In other words, concentrate your attention on the growth drivers, not the day-to-day price action of OGI stock. After all, cannabis stocks are known to make big moves in both directions. It’s just something that OGI investors have to accept.
More important is OrganiGram’s impressive revenue growth. That’s a far better barometer of the company’s health than short-term price movements.
During 2021’s first fiscal quarter, OrganiGram posted year-over-year gains of 42% and 30%, respectively, in Canadian adult-use recreational gross and net revenues. Moreover, OrganiGram posted quarter-over-quarter gains of 14% and 11%, respectively, in the company’s Canadian adult-use recreational gross and net revenues.
In addition, OrganiGram ended the first fiscal quarter of 2021 with $134 million in cash and short-term investments; this demonstrates that the company is in a decent fiscal position and should be able to aggressively develop its brand throughout the year.
The Bottom Line on OGI Stock
Ultimately, OrganiGram’s ability to generate strong revenues and maintain a solid capital position are the most important considerations.
Therefore, there’s no need to worry about what Reddit posters think of OGI stock. Rather, just hold your position and let sound fundamental analysis be your guide.
On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article.
David Moadel has provided compelling content – and crossed the occasional line – on behalf of Crush the Street, Market Realist, TalkMarkets, Finom Group, Benzinga, and (of course) InvestorPlace.com. He also serves as the chief analyst and market researcher for Portfolio Wealth Global and hosts the popular financial YouTube channel Looking at the Markets.