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AFC Gamma (AFCG)
NASDAQ:AFCG

AFC Gamma (AFCG) AI Stock Analysis

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AFC Gamma

(NASDAQ:AFCG)

Rating:49Neutral
Price Target:
$5.50
▼(-2.14%Downside)
AFCG's score is primarily impacted by weak financial performance due to revenue challenges and increased leverage. Despite undervaluation and strategic credit facility expansion, bearish technical indicators and mixed earnings call sentiment contribute to the moderate score.
Positive Factors
Growth Potential
Management noted that its active pipeline remains strong, highlighting potential deals and opportunities.
Market Opportunities
Management's experience in the industry is positive for winning incremental market opportunity as cannabis operators' capital requirements persist.
Operating Model
Operating as a pure-play cannabis lender is seen as a positive in a market where fewer lenders are present.
Negative Factors
Dividend Reduction
AFCG reported downside results and announced that it is cutting its quarterly dividend due to defaults from legacy loans.
Earnings Decline
Distributable EPS declined to $0.29, which was below estimates and consensus, driven by lower net interest income.
Loan Performance
Approximately 39% of AFCG's loans are on non-accrual status, creating uncertainty in credit recovery.

AFC Gamma (AFCG) vs. SPDR S&P 500 ETF (SPY)

AFC Gamma Business Overview & Revenue Model

Company DescriptionAFC Gamma, Inc. originates, structures, underwrites, and invests in senior secured loans, and other types of loans and debt securities for established companies operating in the cannabis industry in states that have legalized medicinal and/or adult use cannabis. It primarily originates loans structured as senior loans secured by real estate, equipment, and licenses and/or other assets of the loan parties to the extent permitted by applicable laws and the regulations governing such loan parties. AFC Gamma, Inc. has elected and qualified to be taxed as a real estate investment trust for the United States federal income tax purposes under the Internal Revenue Code of 1986. The company was incorporated in 2020 and is based in West Palm Beach, Florida.
How the Company Makes MoneyAFC Gamma makes money by providing loans to cannabis operators and earning interest income from these loans. As a REIT, AFC Gamma is required to distribute at least 90% of its taxable income to shareholders in the form of dividends, which it generates primarily through interest payments received on its loan portfolio. The company's revenue streams are primarily driven by the interest rates charged on its loans as well as any origination or structuring fees associated with the financing deals. Additionally, AFC Gamma may benefit from strategic partnerships with key players in the cannabis industry, enhancing its ability to source and structure attractive lending opportunities.

AFC Gamma Earnings Call Summary

Earnings Call Date:May 14, 2025
(Q1-2025)
|
% Change Since: -2.60%|
Next Earnings Date:Aug 12, 2025
Earnings Call Sentiment Neutral
The earnings call demonstrated some financial stability and growth initiatives, such as the renewal of the credit facility and a recent $14 million transaction. However, challenges remain with legacy loans, declining interest income, and ongoing litigation, which balanced the overall sentiment.
Q1-2025 Updates
Positive Updates
New Senior Secured Credit Facility
Advanced Flower Capital renewed its senior secured credit facility with a lead commitment from an FDIC insured bank, with the potential to expand to $100 million, and a maturity date of April 29, 2028.
Recent $14 Million Credit Facility
The company committed to a $14 million senior secured credit facility to subsidiaries of Standard Wellness Holdings, a privately held multistate operator.
First Quarter Distributable Earnings
Advanced Flower Capital generated distributable earnings of $0.21 per basic weighted average share of common stock.
Negative Updates
Interest Income Decline
Interest income declined from $9.2 million in Q4 2024 to $8.5 million in Q1 2025.
Exposure to Underperforming Credits
Despite progress in reducing exposure to underperforming credits, some legacy loans continue to impact earnings.
Pending Litigation with Justice Grown
Advanced Flower Capital is engaged in three legal proceedings with Justice Grown entities related to enforcing rights under the credit facility.
CECL Reserve and Unrealized Losses
The CECL reserve was $29.9 million, approximately 9.75% of loans at carrying value, with a total unrealized loss of $20.4 million.
Company Guidance
During the Q1 2025 earnings call for Advanced Flower Capital, the company provided guidance on several key metrics and developments. They reported distributable earnings of $0.21 per basic weighted average share of common stock and net interest income of $6.6 million. As of March 31, 2025, the company's portfolio included $366.3 million of principal outstanding across 17 loans, which increased to $372.5 million across 18 loans by May 1, 2025. The weighted average portfolio yield to maturity was approximately 18%. The company highlighted a $287 million active pipeline and emphasized their focus on high-quality borrowers and proven operators. They also discussed challenges with underperforming loans and the ongoing litigation with Justice Grown. Additionally, they renewed their senior secured credit facility with a FDIC-insured bank, capable of expanding to $100 million, with a maturity date of April 29, 2028.

AFC Gamma Financial Statement Overview

Summary
AFC Gamma faces significant revenue challenges with no revenue reported in 2024. Profitability was maintained in previous years, but there is a reduction in equity and increased leverage. Cash flow generation is positive but has decreased, highlighting the need to address revenue generation and financial leverage.
Income Statement
35
Negative
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.
Balance Sheet
45
Neutral
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.
Cash Flow
50
Neutral
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.
Breakdown
TTMDec 2024Dec 2023Dec 2022Dec 2021Dec 2020
Income StatementTotal Revenue
40.85M35.76M66.11M71.54M38.08M5.60M
Gross Profit
34.75M35.76M52.04M60.36M35.43M5.23M
EBIT
24.11M13.86M26.98M43.77M21.04M4.78M
EBITDA
18.52M20.65M26.98M43.77M22.16M0.00
Net Income Common Stockholders
20.91M16.78M20.95M35.93M21.00M4.31M
Balance SheetCash, Cash Equivalents and Short-Term Investments
3.32M103.61M121.63M140.37M125.13M9.62M
Total Assets
321.66M402.06M466.59M519.18M464.85M93.96M
Total Debt
88.76M188.61M130.01M157.13M171.42M48.63M
Net Debt
85.44M85.00M39.63M16.76M62.17M39.01M
Total Liabilities
120.85M200.68M146.53M180.12M191.77M1.54M
Stockholders Equity
200.80M201.38M320.05M339.06M273.08M91.65M
Cash FlowFree Cash Flow
19.11M21.56M21.23M31.32M9.54M1.52M
Operating Cash Flow
19.11M21.56M21.23M31.32M9.54M1.52M
Investing Cash Flow
29.95M-4.85M28.52M-16.34M-248.46M-32.43M
Financing Cash Flow
-128.04M-34.72M-68.49M16.15M338.54M40.53M

AFC Gamma Technical Analysis

Technical Analysis Sentiment
Neutral
Last Price5.62
Price Trends
50DMA
5.25
Positive
100DMA
6.41
Negative
200DMA
7.67
Negative
Market Momentum
MACD
0.04
Negative
RSI
59.53
Neutral
STOCH
90.16
Negative
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For AFCG, the sentiment is Neutral. The current price of 5.62 is above the 20-day moving average (MA) of 5.20, above the 50-day MA of 5.25, and below the 200-day MA of 7.67, indicating a neutral trend. The MACD of 0.04 indicates Negative momentum. The RSI at 59.53 is Neutral, neither overbought nor oversold. The STOCH value of 90.16 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for AFCG.

AFC Gamma Risk Analysis

AFC Gamma disclosed 92 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 (61)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
FPFPI
73
Outperform
$551.69M11.4312.09%2.05%-0.52%112.78%
61
Neutral
$2.86B10.960.41%6.08%5.73%-21.25%
49
Neutral
$127.44M5.728.11%16.31%-28.20%89.65%
PWPW
$3.97M-139.84%
* Real Estate Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
AFCG
AFC Gamma
5.62
-1.60
-22.16%
PW
Power REIT
1.16
0.40
52.63%
FPI
Farmland
11.49
1.28
12.54%

AFC Gamma Corporate Events

Private Placements and FinancingBusiness Operations and Strategy
AFC Gamma Expands Credit Facility to $50 Million
Positive
Jun 9, 2025

On June 9, 2025, Advanced Flower Capital Inc. announced an expansion of its senior secured revolving credit facility to $50 million, with an additional $20 million commitment from its existing FDIC-insured banking partner. This expansion aims to fund commitments to existing borrowers, originate and participate in commercial loans to cannabis operators, and support general corporate purposes. The facility can be further expanded to $100 million, subject to lender participation. This move underscores the strength of AFC’s platform and strategy, as highlighted by CFO Brandon Hetzel, and is expected to enhance the company’s lending capabilities and strengthen its partnership with the banking partner.

The most recent analyst rating on (AFCG) stock is a Buy with a $13.00 price target. To see the full list of analyst forecasts on AFC Gamma stock, see the AFCG Stock Forecast page.

Shareholder Meetings
AFC Gamma Holds 2025 Annual Shareholders Meeting
Neutral
May 19, 2025

On May 19, 2025, Advanced Flower Capital Inc. held its 2025 Annual Meeting of Shareholders. During the meeting, shareholders voted on the reelection of a director and the ratification of CohnReznick LLP as the independent registered public accounting firm for 2025. The reelection of the Class II director nominee was approved, extending their term until the 2028 Annual Meeting. Additionally, the appointment of CohnReznick LLP was ratified, securing their role in overseeing the company’s financial audits for the year.

The most recent analyst rating on (AFCG) stock is a Buy with a $13.00 price target. To see the full list of analyst forecasts on AFC Gamma stock, see the AFCG Stock Forecast page.

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.