Bottom Line

Planet 13 Holdings Inc. (CSE: PLTH; OTCQX: PLNHF), a cannabis cultivator and retailer based in Las Vegas, Nevada, posted some strong numbers, particularly regarding the average amount spent per visit in Nevada.

This is positive sign for the marijuana market in Nevada and an indication that the cannabis market in Nevada is outperforming other states.

Meanwhile, Planet 13 is continuing to expand their vertically-integrated network of cannabis cultivation and distribution.

Current shareholders should be pleased with this announcement, although prospective investors should proceed with caution as revenue growth rates for Planet 13 are declining dramatically leaving questions about the rate of future growth and profitability.

Earning Details

The company estimated revenue of ~$63 million (unaudited) for fiscal year 2019.

The company cited strong performance in average sale prices, coming in at over $90 per ticket, with December being particularly notable at over $100 per ticket sale.

This number exceeded the executive team’s initial guidance of around $75 per ticket back when the company went public in July 2018.

The company narrowly missed its target of 2,000 customers served per day, coming in at around 1,900.

However, this narrow miss was more than made up for due to the higher than expected ticket sale price.

Comparing Average Sales per Visit Across States

The tourism focus of Nevada makes it a very desirable location for a dispensary and Planet 13 is putting up big numbers as a result.

Planet 13’s customer spend is above average and on par with recently legalized states where demand far exceeds supply.

The tourism focus of Nevada makes it a very desirable location for a dispensary and Planet 13 is putting up big numbers as a result.

The key moving forward will be the company’s ability to drive more customers through its doors to keep revenue growing.

Average Spent per Visit by State

Source: https://mjbizdaily.com/chart-week-average-marijuana-dispensary-purchase-amounts-range-60-100/

The increase in average ticket sale price in Nevada is even more impressive considering that the per capita annual income in Nevada is only $29,961 compared to Massachusetts at $41,794 and $33,706 nationally in the U.S. according to the U.S. Census Bureau.

We see that Nevada has only about three-quarters of the income per capita compared to Massachusetts but Nevadans are spending a similar amount of money on cannabis-related products per visit.

This is an indication of strong demand in Nevada and good news for Planet 13 who currently only operates within the State of Nevada (although the company has plans to expand into California with a new 40,000 sq. ft. store in Santa Ana).

Planet 13’s Revenue Growth is Slowing

Taking a quick look at previous earnings reports we can see that Planet 13 has consistently grown their revenues over the past few quarters except for the last quarter of 2019 with the latest quarter’s total revenue (Q4 2019) coming in at $16.0 million versus the previous quarter at $16.7 million.

Historical trends can give some reassurance to investors about the fact that the end of the year is usually a slow time for cannabis sales.

However, slightly more concerning is the fact that the revenue growth rate is on the downtrend, and turning negative for the first time ever quarter-over-quarter for December 2019.

Planet 13 needs to decide if it wants to be a small, but very profitable, cashflow machine or a faster-growing major player in the U.S. cannabis market. Regardless of which direction they choose the sooner this vision is explained to the markets the better off investors will be.

Revenue Growth for Planet 13 Holdings Inc.

Source: Yahoo! Finance

This slowdown in revenue may be to blame for a stock price that was relatively flat in 2019.

Planet 13’s stock price was flat on the day ending at $2.35/sh.