Curaleaf's Q4 Profit Swing Ignites Retail Chatter, But Shrinking Revenue Dampens The High

Shares of cannabis retailer Curaleaf Holdings dropped nearly 10% on Monday after the company posted mixed fourth-quarter earnings. 

While Curaleaf reported a profit of $12.4 million, or $0.02 per share, compared with a $5 million loss from the same period last year, revenue declined to $331.1 million from $345.3 million.

Chairman and CEO Boris Jordan highlighted the company's profitability metrics, noting that Curaleaf achieved an adjusted gross margin of 48% and an adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) of $76 million. 

He also pointed to the company's strengthened cash position, with $107 million in cash at year-end, and operating and free cash flow of $163 million and $70 million, respectively.

"Over the past two quarters, my primary objective has been to amplify our strengths, address key challenges, and stabilize the business," Jordan said.

"Having successfully achieved this, we are now forging ahead with our 'Return to our ROOTS' initiative—an ambitious strategy centered on driving organic growth, optimizing margins and cash flow, and reducing debt."

Message volume for Curaleaf surged 366% on Stocktwits following the earnings release, with posts reflecting a divide between bullish and bearish sentiment. 

One trader emphasized Curaleaf's dominant position in the industry, its $1.34 billion annual sales, and improving cash flow, arguing that the company remains well-positioned despite foreign exchange headwinds affecting international sales. 

Others, however, focused on the revenue decline, with one trader calling it a "solid miss as usual" and another predicting that the stock would slip below $1.

Curaleaf and its industry peers have been expanding into THC-infused beverages as federal cannabis legalization efforts stall. 

Last week, the company announced a partnership with Total Wine & More to distribute its Select Zero Proof line of hemp-derived THC seltzers.

Curaleaf stock has lost over 28% this year. 

According to Koyfin data, it trades about 240% below the average price target of $4.02 from 10 analysts. Seven rate it a 'buy,' one assigns a 'strong buy,' and two have a 'hold' rating.

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