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4Front Ventures (TSE:FFNT)
:FFNT
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4Front Ventures
(FFNT)
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Rating:39Underperform
Price Target:―
4Front Ventures is currently facing significant financial hurdles, with declining revenues and high leverage contributing to a low financial performance score. Technical indicators suggest a bearish trend, and valuation metrics indicate unattractiveness due to negative earnings. While the earnings call provided some positive insights into wholesale growth and strategic initiatives, these are overshadowed by challenges in retail performance and increased costs. The company's overall score reflects these underlying issues, highlighting the need for strategic improvements and financial stability.
4Front Ventures (FFNT) vs. iShares MSCI Canada ETF (EWC)
Market Cap
C$4.58M
Dividend YieldN/A
Average Volume (3M)40.00K
Price to Earnings (P/E)―
Beta (1Y)1.54
Revenue GrowthN/A
EPS GrowthN/A
CountryCA
Employees374
SectorHealthcare
Sector Strength45
IndustryDrug Manufacturers - Specialty & Generic
Share Statistics
EPS (TTM)N/A
Shares Outstanding913,929,000
10 Day Avg. Volume40,000
30 Day Avg. Volume40,000
Financial Highlights & Ratios
PEG Ratio0.20
Price to Book (P/B)-2.53
Price to Sales (P/S)1.34
P/FCF Ratio-25.10
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price TargetN/A
Price Target UpsideN/A
Rating ConsensusN/A
Number of Analyst Covering0
EPS Forecast (FY)N/A
Revenue Forecast (FY)N/A
4Front Ventures Business Overview & Revenue Model
Company Description4Front Ventures Corp. owns and manages licensed cannabis facilities in state-licensed markets in the United States. The company operates in two segments, THC Cannabis and Cannabidiol (CBD) Wellness. It produces, cultivates, sells, and distributes cannabis and CBD. As of December 31, 2021, it operated six dispensaries in Massachusetts, Illinois, and Michigan primarily under the MISSION brand name. In addition, the company sells equipment, supplies, and intellectual property to cannabis producers; imports and sale equipment and supplies; leases real estate properties to cannabis producers; offers consulting services; and operates cannabis dispensaries. 4Front Ventures Corp. was founded in 2011 and is based in Phoenix, Arizona.
How the Company Makes Money4Front Ventures generates revenue through its vertically integrated operations in the cannabis industry. The company makes money primarily from the sale of its cannabis products, which are distributed through both its wholesale channels and its owned retail dispensaries. Key revenue streams include the cultivation and sale of cannabis flower, as well as the manufacturing and retailing of cannabis-derived products such as edibles, concentrates, and other consumer packaged goods. Additionally, 4Front Ventures benefits from strategic partnerships and licensing agreements, which allow it to expand its product offerings and market reach while leveraging its established infrastructure and expertise in the cannabis sector.
4Front Ventures Earnings Call Summary
Earnings Call Date:Nov 14, 2024
(Q3-2024)
| % Change Since: |
Next Earnings Date:May 25, 2026
Earnings Call Sentiment Neutral
The earnings call presented a mixed outlook for 4Front Ventures. There were significant achievements in wholesale growth and market expansion, particularly in Massachusetts and Illinois, and improvements in product quality. However, these positives were counterbalanced by declines in retail revenue, competitive challenges, and increased operational costs. The company is taking strategic steps to address these issues, indicating a cautiously optimistic future.Q3-2024 Updates
Positive Updates
Record Wholesale Growth in Massachusetts and Illinois
The wholesale operations in Massachusetts saw an impressive 56% increase quarter-over-quarter, while Illinois delivered steady results leading up to the potential full utilization of the Matteson facility. This reflects strong momentum in wholesale performance.
Washington Market Success
Washington achieved a 6.6% quarter-over-quarter revenue growth, with record-breaking sales across multiple product categories. The EZ Vape line and live resin products highlighted the success, with notable increases in sales.
Significant Expansion in Illinois
The Matteson facility is expected to significantly increase capacity, with 24,000 square feet of flowering canopy already active and plans to expand to 34,800 by mid-January 2025. This expansion is anticipated to drive substantial growth in the Illinois market.
Strong October Wholesale Performance
October was one of the strongest months for wholesale this year, with Massachusetts reporting a 91% year-over-year increase in wholesale revenue. Illinois also saw significant multi-store orders and promotions driving strong demand.
Quality Improvements in Product Lines
Massachusetts achieved a 100% pass rate on cultivation tests, reflecting significant improvements in flower quality and expanded product offerings, setting quality benchmarks even in a competitive environment.
Strategic Financial Adjustments
Efforts to streamline costs and enhance operational efficiencies are underway, with plans to raise additional capital and optimize the balance sheet to support long-term profitability and expansion.
Negative Updates
Retail Revenue Declines
The quarter saw an 8% decline in total revenue from Q2 2024, attributed to retail softness in both Massachusetts and Illinois markets, compounded by increased costs from the Matteson facility.
Challenges in Illinois Retail Market
Mission stores in Illinois experienced a 12% decline quarter-over-quarter due to intensified competition from new retail entrants and localized temporary challenges.
Massachusetts Market Pricing Challenges
The Massachusetts market faced tough pricing conditions, with flower pricing softening in the mid-single-digit percentages during the quarter.
Increased Operational Costs
The operational costs associated with the Matteson facility contributed to a decrease in adjusted EBITDA, which fell from $2.6 million in Q2 2024 to $1 million in Q3 2024.
Company Guidance
During the 4Front Ventures Third Quarter 2024 earnings call, management highlighted several key metrics reflecting the company's progress and strategic direction. Total revenue from Illinois and Massachusetts reached $17.1 million, with a notable 56% quarter-over-quarter increase in Massachusetts' wholesale operations. In Illinois, the Matteson facility, which features 24,000 square feet of flowering canopy with plans to expand to 34,800 square feet by mid-January 2025, is expected to produce 3,000 pounds of total biomass monthly by year-end. Washington reported a 6.6% quarter-over-quarter revenue growth, generating $9.72 million in sales, with record-breaking wholesale sales across multiple categories. Despite challenges, Massachusetts achieved a 100% pass rate on cultivation tests since the end of Q2. The company maintained a disciplined approach in optimizing its balance sheet, with $1 million in cash and total debt at $68 million, aiming to ensure stability and drive future growth. Management expressed optimism about the potential impact of federal reforms, such as rescheduling cannabis to Schedule 3 in 2025.4Front Ventures Financial Statement Overview
Summary
4Front Ventures faces significant financial challenges with declining revenues, ongoing losses, and high leverage. Despite some improvements in operating cash flows, the company's financial health remains precarious due to negative equity and consistent cash flow deficits. Continued focus on improving profitability and reducing reliance on debt is crucial for stability.Income Statement
The company shows a declining revenue trend with a decrease from $118.6M in 2022 to $75.6M in TTM, indicating challenges in maintaining sales growth. The gross profit margin is also down, reflecting reduced efficiency or increased costs. The company is operating at a loss with negative net and EBIT margins, highlighting ongoing profitability issues.40
Negative
Balance Sheet
The balance sheet reveals a negative stockholders' equity, indicating financial distress. The debt-to-equity ratio is undefined due to negative equity, but the company has a high level of debt compared to its assets, suggesting financial leverage risks. The equity ratio is negative, emphasizing the company's reliance on debt financing.30
Negative
Cash Flow
The cash flow statement shows improvement in operating cash flows, moving from negative to positive in TTM. However, free cash flow remains negative, indicating ongoing cash burn. The operating cash flow to net income ratio is favorable, but the negative free cash flow to net income ratio highlights sustainability concerns.35
Negative
| Breakdown | TTM | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 | Dec 2019 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 75.61M | 97.44M | 107.66M | 104.57M | 57.63M | 19.03M |
| Gross Profit | 26.90M | 45.89M | 51.42M | 49.40M | 36.51M | 8.18M |
| EBITDA | -13.27M | -18.26M | 6.51M | -4.02M | -20.60M | -168.30M |
| Net Income | -36.40M | -91.65M | -46.90M | -38.31M | -47.05M | -182.01M |
Balance Sheet | ||||||
| Total Assets | 278.08M | 263.95M | 344.73M | 255.53M | 204.76M | 203.92M |
| Cash, Cash Equivalents and Short-Term Investments | 1.25M | 3.40M | 15.19M | 22.58M | 18.93M | 5.79M |
| Total Debt | 214.15M | 209.84M | 224.83M | 167.89M | 120.47M | 111.13M |
| Total Liabilities | 326.54M | 315.35M | 316.38M | 214.62M | 162.55M | 127.94M |
| Stockholders Equity | -48.56M | -51.50M | 28.26M | 40.83M | 42.15M | 76.18M |
Cash Flow | ||||||
| Free Cash Flow | -474.00K | -5.20M | 6.33M | -8.10M | -27.92M | -48.05M |
| Operating Cash Flow | 4.54M | -1.84M | 8.77M | 5.78M | -14.04M | -25.02M |
| Investing Cash Flow | -4.57M | -3.44M | -26.87M | -13.01M | 39.34M | -19.50M |
| Financing Cash Flow | -1.45M | -5.55M | 10.71M | 10.89M | -14.51M | 48.88M |
4Front Ventures Technical Analysis
Negative
0.01
Price Trends
0.01
Negative
0.01
Negative
0.01
Negative
Market Momentum
>-0.01
Negative
36.76
Neutral
0.00
Positive
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TSE:FFNT, the sentiment is Negative. The current price of 0.01 is below the 20-day moving average (MA) of 0.01, below the 50-day MA of 0.01, and below the 200-day MA of 0.01, indicating a bearish trend. The MACD of >-0.01 indicates Negative momentum. The RSI at 36.76 is Neutral, neither overbought nor oversold. The STOCH value of 0.00 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for TSE:FFNT.
4Front Ventures Peers Comparison
UnderperformOutperform
Sector (51)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
51 Neutral | $7.86B | -0.30 | -43.30% | 2.27% | 22.53% | -2.21% | |
50 Neutral | C$4.96M | 13.64 | ― | ― | -2.30% | ― | |
44 Neutral | C$5.29M | -0.95 | -148.48% | ― | -46.59% | 8.26% | |
43 Neutral | C$7.03M | -8.33 | -17.81% | ― | 13.01% | -2445.45% | |
42 Neutral | C$4.95M | -2.70 | -150.44% | ― | 55.74% | -27.59% | |
39 Underperform | C$4.58M | -0.18 | ― | ― | ― | ― |
* Healthcare Sector Average
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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.