The largest marijuana company in the US spikes after its chairman says business is booming and the company will be profitable next year
- Curaleaf, the largest marijuana company in the US, said it would be net-income positive next year in an interview with Bloomberg TV on Wednesday.
- Shares of the company jumped nearly 6% in early trading Thursday.
- Boris Jordan, the chairman of Curaleaf's board, said that the US cannabis market is turning around and showing signs of booming.
- Watch Curaleaf trade live on Markets Insider.
Curaleaf, the largest marijuana company in the US, expects to turn a profit in the next year, showing signs of life in the industry which has underperformed over the last few months.
Curaleaf turned EBITDA profitable this quarter, said Boris Jordan, the chairman of the Curaleaf board, in an interview with Bloomberg TV on Wednesday. The company intends to finish the year EBITDA positive, and expects that it will be net income positive next year, Jordan said.The interview came after the company reported second-quarter earnings Tuesday, showing a larger-than-expected loss after two acquisitions but forecasting revenue of more than $1 billion in 2020.
Shares of the company gained as much as 5.95% in early Thursday trading on the news.
Shares of cannabis companies outside Canada have fallen as much as 24% over the last 90 days, according to W. Andrew Carter, an analyst at Stifel. Regulatory risks, financing risks, and continued high expenses have increased the sector's weakness, he added.
But Curaleaf's expectation for profitability shows that the US cannabis industry is picking up again after lagging over the last few months.
"The US industry is turning around," Jordan said. He added that other US companies could start showing profitability soon.
Jordan also addressed Curaleaf's mergers and acquisitions. In July, Curaleaf bought Grassroots Cannabis, a Chicago-based company, in an $875 million cash-and-stock deal. The deal is expected to close in early 2020 pending state-level approval and a potential federal antitrust review from the Department of Justice."We think the DOJ is trying to educate itself on the cannabis sector," Jordan said. "We anticipate as they go through that process they'll begin to approve mergers and acquisitions."
Curaleaf also ran into trouble with the US Food and Drug Administration in July, when it received notice that not all of the retailer's products were approved for sale in the US. Shares fell as much as 15% on the news.
Curaleaf shares are up 34% year-to-date.