How Does Schwazze Have a $61M Market Cap After Reporting $45M of Quarterly Revenue and has $33M of Cash???

Last week, Schwazze (OTCQX: SHWZ) (NEO: SHWZ) released second quarter financial results and we are impressed with how the fundamentals have improved since last year. 

At current levels,  the United States (US) multi-state operator (MSO) is trading at less than 2x cash after just reporting almost $45 million of revenue…in a quarter!!! To help our readers understand our bullish outlook on the MSO we have highlighted 9 key data points from last week’s earnings report and believe our readers should be aware these metrics:

1. During the quarter, Schwazze reported strong growth across several key business units and we find this to be significant. We believe the business is in the early stages of a hyper growth cycle and will monitor how the business continues to perform. 
2. When compared to the same quarter last year, revenue increased by 44% and came in at $44.3 million. Schwazze also reported $15 million of adjusted EBITDA and we are bullish on these statistics. 
3. While most North American cannabis companies are working to become profitable, S Schwazze reported more than $33 million of net income which is significantly higher than the $4.4 million reported in the same quarter of last year. 
4. The last few months have been busy for Schwazze and we are bullish on the trend. Since December 2021, Schwazze has closed acquisitions and added 15 cannabis dispensaries to the portfolio (10 in New Mexico and 5 in Colorado), five cultivation facilities (4 in New Mexico and one in Colorado) as well as a manufacturing asset in New Mexico.
5. With more than $33 million in the bank, Schwazze is well positioned to grow the business through a variety of organic and inorganic growth initiatives. We believe the strong balance sheet and the performance of the business will allow it to acquire strategic assets at low valuations. 

Schwazze has rallied more than 15% off its low in early August. With a market capitalization of less than $65 million, we believe the market is discounting the company’s growth prospects. Although we believe the next two quarters will be pivotal for the business, we are optimistic due to the management team’s ability to execute.

During the last year, Schwazze recorded major advancements and entered several emerging cannabis markets. Continued execution is a common theme we have noticed with the and believe our readers should be aware of how the story has evolved. At current levels, we believe that Schwazze has significant upside potential and consider the business to be an operator with significant growth catalysts.

If you are interested in learning about Schwazze, please send an email to support@technical420.com with the subject “Schwazze Is Flying Under The Radar” to be added to our distribution list.

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Michael Berger is Managing Partner of StoneBridge Partners, LLC and Founder of Technical420.com. Prior to entering the cannabis industry, Michael was an Equity Research Analyst at Raymond James Financial covering the Energy Sector. Michael has been featured in publications such as The Street, Bloomberg, US Money News, and hosts various cannabis events across North America.

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