Flora Growth (NASDAQ:FLGC) stock was not part of the April 4 rally in cannabis stocks.
It fell 15% overnight after announcing a secondary offering worth $3.2 million. Secondary offerings, new shares created by a company to raise cash, water down the value of existing shares.
FLGC stock was recovering slightly during this morning’s opening and is currently down only 13%. It was trading early in the trading session at $2.32 per share. The market capitalization at that price was still under $21 million.
A German Play
Flora Growth describes itself quite grandly in press releases. It’s “a cannabis focused consumer-packaged goods leader and pharmaceutical distributor serving all 50 states and 28 countries with 20,000+ points of distribution around the world.”
But it’s not that big a deal. Flora reported sales of $37 million in 2022 and a loss of $52.4 million. Quarterly numbers for 2023 indicate another revenue doubling, but it has yet to issue a 10-K report.
Most pioneers in the cannabis business, including Flora, were started in Canada, where pot has been legal for years. But Flora now has a base in Florida. The company distributes its product through a brand called Vessel. It also has a CBD gummy division aimed at pain relief and a unit called Fatima in southern Germany. It has plans to enter the beverage market with a product called Mellow and recently sold a unit based in Columbia.
The stock’s prospects may be a bet on the German market. Flora recently said it will buy TruHC Pharma, a German cannabis firm, for $6.4 million in stock. A press release on the deal claims it creates “a new leader in German cannabis.”
The company has also announced a distribution agreement for its Vessel brand in the United Kingdom.
FLGC Stock: What Happens Next?
Investors may have opportunities in this new market but must tread carefully. Competition is going to be intense.
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On the date of publication, Dana Blankenhorn did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
