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Quick summary: Like many Canadian cannabis stocks, Organigram has had a difficult couple of years coping with oversupply and operational challenges. The company has a newly appointed CEO along with a partnership with a major tobacco company, which could provide it with some breathing space as the Canadian market improves and international markets beckon.
Organigram: Key Metrics & Data
- CEO: Beena Goldenberg (appointed 2021)
- Stock ticker: OGI
- Location: Moncton, New Brunswick, Canada
- Sector: Cannabis
- Exchange: NASDAQ, TSX
- Market Cap: $717 million (small-cap)
- Investor relations link: https://investors.organigram.ca/share-information
- Robinhood categories: 100 Most Popular, Canada, Agriculture, Cannabis
What is Organigram?
Organigram Holdings, Inc. (stock ticker: OGI) is a licensed producer of cannabis and cannabis-derived products primarily in Canada, through a wholly owned subsidiary, Organigram Inc. The company was founded in 2013 and originally focused on the medical cannabis market in Canada. It has since expanded into the adult recreational Canadian market, with aspirations to expand internationally. It operates out of a main facility in New Brunswick, Canada as well as leasing an additional facility in Winnipeg.
The company has a portfolio of different cannabis brands available to Canadian consumers, including:
- The Edison Cannabis Company – An Alberta-based company that produces its own proprietary cannabis flower, oils, extracts, and beverages.
- Indi – A specialty cannabis brand focused exclusively on the indica strain.
- Big Bag o’ Buds – A dried flower brand that features favorite strains and limited edition offerings.
- SHRED – A brand that offers pre-milled flower and edibles, called “Shred-ems.”
- Trailblazer – A cannabis brand focused on flower, pre-rolls and edibles.
- The Edibles & Infusions Corp. – A white-label edibles company focused on soft-chews.
OGI Stock History
As common with many Canadian-based companies, Organigram is dual-listed on the Toronto Stock Exchange and NASDAQ. For our purposes as Robinhood investors, we’ll focus on the NASDAQ-listed shares, which debuted in mid-2019 after being “uplisted” from the OTC market.
While our focus will be on the NASDAQ shares, it is interesting to note that the TSX-listed shares have had quite a run. Organigram had its Canadian IPO in 2012 where its shares ended the day at $0.29 per share. The shares now trade at over $3 per share in Canadian dollars, which is about a 10x gain since the IPO. So the company has been a very strong investment for Canadian investors and shows that the company has had some operational success.
Unfortunately for those who jumped in after the shares were listed on the NASDAQ, the ride has been somewhat bumpier. The stock traded above $7.00 per share when it joined the NASDAQ in late May 2019 and began a steady decline, along with most other cannabis stocks as structural issues with the Canadian cannabis market made it a difficult operating environment for Organigram and fellow Canadian pot stock Sundial Growers. By the summer of 2020, the stock was near $1.00 per share, presenting steep losses to those who held the NASDAQ shares.
Organigram bounced back in 2021, surging to a high of $4.44 in March, before giving up some gains and trading around $2.39 per share at the time of writing.
Organigram: Strategy & Potential Catalysts
Organigram has had a difficult past couple of years from an operational standpoint. Oversupply and a still flourishing back market for cannabis in Canada reduced the price of their product and the company has had a number of stumbles related to its facility production, resulting in large write-downs.
However, the company has a number of potential catalysts, not least the fact it has become popular with Robinhood and other retail investors, who tend to favor lower-priced stocks and many of whom are attracted to the volatility of cannabis stocks. The company also announced a partnership with British American Tobacco, a major consumer tobacco company that now owns just under 20% of Organigram and will lend its operational expertise and provide capital for expansion.
The company is betting on “Cannabis 2.0” and trying to position itself as a leader in areas including edibles and vapes. Below are some other specific catalysts for potential investors to evaluate:
- New CEO – Organigram appointed Beena Goldenberg as the first female CEO of a major Canadian publicly traded cannabis company, according to MJBizDaily. She was previously CEO of Supreme Cannabis, which was acquired by Canopy Growth in June 2021. Previously she worked at major consumer brand Hair-Celestial Canada. Anytime a company hires a new CEO you can expect some adjustments to strategy and the potential catalyst of improved management performance. The fact her previous cannabis company was successfully acquired leaves open the possibility that Organigram could follow down the same path, which would likely be a plus for shareholders if the company is sold for a premium.
- International expansion – With the Canadian market improving but still soft, gaining traction in international markets is key for Organigram. The collaboration with British American Tobacco could help the company expand into some international markets and positioning to enter foreign markets when legally possible to do so remains a focus of the company.
- US legalization – All Canadian cannabis companies are counting down the days until nationwide legalization happens in the US. A company like Organigram, with its extensive operational experience and now a partnership with BAT, could potentially be positioned to make a strong entry into the US. However, there is still no strong signal that nationwide legalization will occur anytime soon. However, any positive noises about legalization in the US could provide support for OGI stock.
OGI Stock Forecast and Analysis
Below we collect a number of recent opinions on OGI stock from analysts, journalists and others who follow the stock to give you a broad overview between the bulls and the bears. Lean Investments has no affiliation with any of the below commentators and the information below should be considered a starting point for your own research and not a recommendation of any kind. Keep in mind that the commentary below may not reflect the latest developments with the company and the stock price can move quickly based on new headlines.
- “Despite its double-digit revenue growth, OrganiGram reported a negative gross profit in Q3 if we account for fair value adjustments. The Canadian marijuana producer has assured investors that it will improve gross margins going forward as the company has identified multiple cost-efficiency opportunities that will enhance its profitability profile. During its Q3 earnings call, OrganiGram disclosed it has already launched 84 new products in the past year and plans to add 20 stock-keeping units by end of fiscal 2021. This ramp-up in product offerings will increase OGI’s cost base and may result in higher inventory write-downs.”
—Aditya Raghunath, The Motley Fool, September 2021
- “Further, OrganiGram reported cash and short-term investments of $222 million as of July 2021. With strong financial flexibility, the company is well positioned to pursue investments in research and development. It’s worth noting that OrganiGram is focused on recreational as well as medicinal cannabis…Focus in research and innovation is likely to deliver long-term results. In particular, the medicinal cannabis market has lack of evidence-backed medicines. The company can make inroads in a potentially big medicinal cannabis market.”
—Faisal Humayun, Investorplace, July 2021
- “Should cannabis retail stores begin to reopen in earnest during the back half of this year, we expect the adult-use cannabis market—and edibles market, in particular—to accelerate materially, with OGI well-positioned for advantage. With this capability bolstering transaction, we believe OGI is skating to where the puck is going, not where it is today.” —Raymond James analyst Rahul Sarugaser in MarketWatch, April 2021
- “With legalization efforts well under way at the state and hopefully federal level, coupled with higher approval ratings, we could see massive growth in cannabis stocks. It helps that big companies like British American Tobacco have begun to invest in the sector. With growth likely, I’d take a position in OGI for the long-term. At the moment, it’s oversold, and could double, if not triple with patience. After all, the cannabis boom isn’t showing any signs of slowing down, at least not any time soon.”
—Ian Cooper, Investorplace, March 2021
Alternatives to OGI on Robinhood
If you’re interested in investing in the cannabis market, but still unsure of the individual prospects for OGI’s stock, there are many other cannabis stocks and ETFs available on Robinhood.
Recently, famous investor Doug Kass pointed to a generational opportunity in cannabis stocks, but advised investors to play the trend with ETFs and not try to pick individual winners. Kass recommended both the AdvisorShares Pure US Cannabis ETF (ticker: MSOS) and the ETFMG Alternative Harvest ETF (ticker: MJ), on a recent interview with Bloomberg Surveillance.
These ETFs provide investors with dozens of different cannabis companies in one portfolio, limiting the single-stock risk that comes with holding just one company. The MJ ETF, for example, holds a significant position in Organigram, while also providing exposure to larger cannabis companies including Aurora Cannabis, Tilray and Canopy Growth.
Above is our profile of Organigram stock, a popular cannabis stock on Robinhood with a challenging outlook but also with some promising potential catalysts to further research.