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AFC Gamma (AFCG)
NASDAQ:AFCG
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AFC Gamma
(NASDAQ:AFCG)
Rating:48Neutral
Price Target:
$4.50
▼(-1.32% Downside)
Positive Factors
Business Model Adaptation
The conversion from a REIT to a BDC allows AFC Gamma to diversify its investment opportunities beyond real estate-backed assets, potentially increasing its revenue streams and reducing dependency on a single asset class.
Credit Facility Expansion
The expansion of the credit facility enhances AFC Gamma's liquidity position, enabling it to support more cannabis operators and potentially increase its loan portfolio, which could drive future revenue growth.
Cannabis Rescheduling Impact
Rescheduling cannabis could lead to increased capital supply for cannabis companies, improving asset valuations and loan recoveries, thus benefiting AFC Gamma's financial stability and growth prospects.
Negative Factors
Revenue Challenges
The absence of revenue in 2024 indicates significant operational challenges and raises concerns about AFC Gamma's ability to generate income, impacting its long-term financial health and sustainability.
Increased Leverage
The increase in leverage suggests higher financial risk, potentially limiting AFC Gamma's ability to invest in growth opportunities and increasing vulnerability to market fluctuations, affecting long-term stability.
Underperforming Loans
Underperforming loans and increased credit reserves indicate elevated credit risk, which could lead to further financial strain and impact AFC Gamma's ability to maintain profitability and investor confidence.
AFC Gamma (AFCG) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$103.03M
Dividend Yield25.06%
Average Volume (3M)315.79K
Price to Earnings (P/E)4.8
Beta (1Y)1.01
Revenue Growth-47.74%
EPS Growth-156.57%
CountryUS
EmployeesN/A
SectorReal Estate
Sector Strength53
IndustryREIT - Specialty
Share Statistics
EPS (TTM)0.15
Shares Outstanding22,594,542
10 Day Avg. Volume447,326
30 Day Avg. Volume315,791
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)N/A
P/FCF RatioN/A
Enterprise Value/Market Cap1.89
Enterprise Value/Revenue6.72
Enterprise Value/Gross Profit7.24
Enterprise Value/Ebitda-106.37
Forecast
1Y Price Target
$4.50Price Target Upside-1.32% Downside
Rating ConsensusHold
Number of Analyst Covering1
AFC Gamma Business Overview & Revenue Model
Company DescriptionAFC Gamma, Inc. (AFCG) is a real estate investment trust (REIT) focusing on the cannabis industry. The company is engaged in providing loans and other forms of capital to cannabis operators across various sectors, including cultivation, processing, and retail. AFC Gamma aims to support businesses within the cannabis industry by offering tailored financial solutions, thereby facilitating their growth and expansion.
How the Company Makes MoneyAFC Gamma makes money primarily through the interest and fees generated from the loans it provides to cannabis businesses. As a REIT, AFC Gamma is required to distribute at least 90% of its taxable income to shareholders in the form of dividends, which are funded by the income generated from its lending activities. The company strategically partners with cannabis operators to offer secured loans, often collateralized by real estate or other valuable assets, thus ensuring a steady revenue stream. Additionally, AFC Gamma may also earn income from equity investments or warrants in the companies it finances, further diversifying its revenue base.
AFC Gamma Earnings Call Summary
Earnings Call Date:Aug 14, 2025
(Q2-2025)
| % Change Since: |
Next Earnings Date:Nov 05, 2025
Earnings Call Sentiment Neutral
The earnings call highlighted strategic changes such as the proposed conversion to a BDC and an expanded credit facility, which could offer growth and diversification opportunities. However, these positives were offset by significant financial challenges, including a net loss, underperforming loans, and increased credit reserves, reflecting ongoing difficulties in the cannabis market.Q2-2025 Updates
Positive Updates
Proposed Conversion to a Business Development Company (BDC)
Advanced Flower Capital announced its intention to convert from a REIT to a BDC. This conversion is expected to expand the investment universe and allow the company to lend to operators without real estate coverage, potentially increasing opportunities.
Expansion of Senior Secured Revolving Credit Facility
During the second quarter of AFC expanded a senior secured revolving credit facility from $30 million to $50 million, with an additional $20 million commitment from the facility's lead arranger.
Potential Rescheduling of Cannabis
There is talk of cannabis rescheduling being considered by the Trump administration, which could increase the supply of capital for cannabis companies and lead to potentially better recoveries for troubled loans.
Negative Updates
Distributable Earnings and Net Loss
AFC generated distributable earnings of $0.15 per share, but recorded a GAAP net loss of $13.2 million or a loss of $0.60 per share.
Underperforming Loans and Credit Challenges
AFC continues to have issues with underperforming loans, including loans to Private Company A and Private Company P, which moved to nonaccrual status due to non-payment.
CECL Reserve Increase
The CECL reserve was $44 million or approximately 14.6% of loans at carrying value, indicating increased credit risk within the portfolio.
Company Guidance
During the second quarter 2025 earnings call for Advanced Flower Capital, the company provided guidance on several key metrics and strategic initiatives. The firm reported distributable earnings of $0.15 per basic weighted average share of common stock, with a declared dividend of $0.15 per share. The net interest income totaled $6.2 million, while the GAAP net loss was $13.2 million or $0.60 per share. The portfolio consisted of $359.6 million in principal outstanding across 15 loans, with a weighted average portfolio yield to maturity of approximately 17% as of August 1, 2025. A significant focus was on the proposed conversion from a Real Estate Investment Trust (REIT) to a Business Development Company (BDC), aiming to broaden investment opportunities beyond real estate-backed assets. The management also highlighted challenges with underperforming loans, noting a $44 million CECL reserve, and discussed ongoing legal proceedings related to enforcing rights under credit facilities. The call emphasized the potential impact of cannabis rescheduling discussions on the market, which could bolster asset valuations and improve loan recoveries.AFC Gamma Financial Statement Overview
Summary
AFC Gamma faces significant revenue challenges, with no revenue reported in 2024. Despite maintaining profitability in previous years, the balance sheet shows a reduction in equity and increased leverage. Cash flow generation remains positive but has decreased over the observed period. The company needs to address its revenue generation and leverage to improve its financial position.Income Statement
AFC Gamma has experienced declining revenue, with a significant drop from $71.54M in 2022 to $66.11M in 2023 and no revenue reported for 2024. Net profit margin improved to 25.39% in 2023 but remains unassessed for 2024 due to no revenue. EBIT and EBITDA margins were stable in prior years but unmeasurable for 2024. This indicates some profitability but significant top-line challenges.35
Negative
Balance Sheet
The company's balance sheet shows a reduction in stockholders' equity from $339.06M in 2022 to $201.38M in 2024, indicating a downward trend. The debt-to-equity ratio increased from 0.46 in 2022 to 0.44 in 2024, suggesting increased leverage. The equity ratio declined, reflecting a decrease in the proportion of equity financed by total assets.45
Neutral
Cash Flow
Operating cash flow has decreased from $31.32M in 2022 to $18.29M in 2024, and free cash flow followed a similar trend. Free cash flow to net income ratio indicates adequate cash generation relative to reported profits in 2023. This suggests some operational cash flow challenges despite maintaining positive free cash flow.50
Neutral
| Breakdown | TTM | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 29.03M | 51.90M | 66.11M | 71.54M | 38.08M | 5.60M |
| Gross Profit | 26.92M | 41.49M | 52.04M | 60.36M | 35.43M | 5.23M |
| EBITDA | -1.83M | 20.65M | 26.98M | 43.77M | 22.16M | 0.00 |
| Net Income | -8.70M | 16.78M | 20.95M | 35.93M | 21.00M | 4.31M |
Balance Sheet | ||||||
| Total Assets | 290.59M | 402.06M | 466.59M | 519.18M | 464.85M | 93.96M |
| Cash, Cash Equivalents and Short-Term Investments | 3.41M | 103.61M | 121.63M | 140.37M | 125.13M | 9.62M |
| Total Debt | 99.31M | 188.61M | 130.01M | 157.13M | 171.42M | 48.63M |
| Total Liabilities | 105.86M | 200.68M | 146.53M | 180.12M | 191.77M | 1.54M |
| Stockholders Equity | 184.73M | 201.38M | 320.05M | 339.06M | 273.08M | 91.65M |
Cash Flow | ||||||
| Free Cash Flow | 10.55M | 21.56M | 21.23M | 31.32M | 9.54M | 1.52M |
| Operating Cash Flow | 10.55M | 21.56M | 21.23M | 31.32M | 9.54M | 1.52M |
| Investing Cash Flow | -67.47M | -4.85M | 28.52M | -16.34M | -248.46M | -32.43M |
| Financing Cash Flow | -109.96M | -34.72M | -68.49M | 16.15M | 338.54M | 40.53M |
AFC Gamma Technical Analysis
Positive
4.56
Price Trends
4.48
Positive
4.74
Negative
6.02
Negative
Market Momentum
0.06
Negative
53.34
Neutral
26.50
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For AFCG, the sentiment is Positive. The current price of 4.56 is above the 20-day moving average (MA) of 4.36, above the 50-day MA of 4.48, and below the 200-day MA of 6.02, indicating a neutral trend. The MACD of 0.06 indicates Negative momentum. The RSI at 53.34 is Neutral, neither overbought nor oversold. The STOCH value of 26.50 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for AFCG.
AFC Gamma Risk Analysis
AFC Gamma disclosed 95 risk factors in its most recent earnings report. AFC Gamma reported the most risks in the "Finance & Corporate" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
AFC Gamma Peers Comparison
Overall Rating
UnderperformOutperform
Sector (63)
Financial Indicators
Performance Comparison
AFCG
AFC Gamma
4.56
-4.42
-49.22%
PW
Power REIT
1.05
-0.03
-2.78%
FPI
Farmland
10.89
1.34
14.03%
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.