Revenues are increasing for Glass House Brands, and they are crossing the threshold for EBITDA profits. GLASF stock has remained lofty while other stocks within the sector have sold off entirely during 2023. Yet, Glass House Brands does not outperform the industry – I found this curious. If nothing more, it is a launching board for GLASF stock to continue to move higher throughout 2024. With rescheduling, and then with up-listing on these stocks, I expect that most of these companies are going to see an increase in interest. With a wider possible net of potential investors, and with companies turning a corner and getting closer to profitability, stocks such as GLASF stock are going to remain lofted and likely start a long, slow move higher – something I expect throughout 2024.
For now, the momentum and potential continues to build with Glass House Brands in both their financial metrics and stock. There were sizable gains in revenue and margins which translated to sizable gains in EBITDA profit. If the momentum for the financials continues, economies of scale with more product moving through the system will ensure that fixed costs are covered and increasing variable costs will translate in to higher marginal profits. This, in turn, with this momentum, is going to push GLASF stock higher.
Projected Revenue
Glass House Brands printed large gains in revenue and analysts expect further gains throughout 2024. 2023 should finish the year doubling 2022’s revenue total. Then, in 2024, analysts expect an additional 30% revenue increase year-over-year. That increase should drive EBITDA profits even higher as Glass House Brands prints solidified margins. This is what I am looking toward with Glass House Brands and other companies. I am looking for continued increases in revenues as well as continued improvements in metrics such as EBITDA.
Next, profits will shift upward as 280E gets removed from the mix. With more and more foot traffic through dispensary doors, organic sales will move higher and cover fixed costs more and more. Next, marginal profits increase with each additional product sold, improving the bottom line more and more. It is a process, not an event.
Margins
Looking toward performance from the angle of gross profits and operating profits, Glass House Brands is achieving these milestones. Glass House Brands is starting to build this foundation and they will be able to grow their profits from here. Continued increases in revenue will mean continued profit levels for gross profits & operating profits. Next is EBITDA which at the current levels show that Glass House Brands is performing well.
EBITDA
The latest increase in EBITDA profits is promising and proves that at this point Glass House Brands has achieved a milestone that they can build upon. Getting to EBITDA profitability at a level that is solid compared to the broader industry. If Glass House Brands continues to build upon this, then they can start to trickle to the final portion of the income statement: continuing costs.
EBITDA profits cover the core business costs such as producing profits and paying for the back office costs. If a company that is just starting out can sell enough profits to become profitable EBITDA, they can build upon that. The momentum shows that consumers continually return to buy product – not all companies see this happening. This tells me that Glass House Brands has a quality product that consumers will enjoy. Next, management is getting the product out in front of consumers and executing their plan and keeping costs contained. The final piece is paying for borrowing costs and other financial costs. Getting revenues up to a level where Glass House Brands is hitting their stride there will enable them to pay that final portion of costs.
Total Equity
Total equity is assets less liabilities. Glass House Brands has seen some profitable quarters but, that is owed to costs outside of normal operations – one-offs. If revenues continue to climb and Glass House Brands can improve their bottom line losses, borrowing on a quarterly basis will diminish and eventually, Glass House Brands will start to see their total equity increase. Then, they can start to utilize their total equity to grow the business further.
GLASF Stock
GLASF stock has remained steady as you can see here. Whereas the end of 2022 saw all cannabis stocks sell off and stay sold in a bear market, GLASF remained steady. There is nothing outstanding with GLASF that keeps this stock loftier than others. In fact, some others are net earnings profitable. My thinking is that GLASF stock simply has not hit short sellers’ radar for them to sell deep in to the stock. This could limit up moves as there are no real short sellers to exit the market, and that would likely keep moves higher contained.
Look for the increases in 2024 to push EBITDA profits higher. And, look for net earnings to become more stabilized and eventually turn upward continuously.