Organigram Holdings (TSX:OGI) (NASDAQ:OGI) haven’t had much of luck, the stock of the company being down by 38% since the start of 2020. The company recently also announced its results for the second quarter on April 14, which failed to impress the investors.
The company reported a decline in its net revenue to 23.2 million Canadian dollars in the 2nd quarter from its year-over-year figure of 26.9 million Canadian dollars. This decline can be attributed to a fall in recreational cannabis sales generating a mere revenue of 18.9 million Canadian dollars. The previous year-over-year revenue from recreational sales was 30.7 million Canadian dollars.
Moreover, the company reported having three major customers, which contributed beyond 10% of the company’s net revenue individually. This puts OrganiGram Holdings in a more difficult position within the industry where liquidity crisis is consistent.
The company reported a cash balance of 41.1 million Canadian dollars; down from August 31st balance of 47.6 million dollars. The company used 25 million Canadian dollars for its operating activities and another 25 million Canadian dollars on investment and other activities. OrganiGram has been taking debts and issuing shares in order to keep up its cash balance. The company is also further trying to cut down on its expenses. It has announced a layoff of over 400 employees – that means 45% of its workforce.
To add to the woes, the current economic situation could also possibly lead to a decrease in demand. This would put extreme pressure on the company for cutting its costs due to the additional decline in the revenue. The sale of the company has been underwhelming.
Having first been traded on May 21, 2019, OraganiGram has already lost beyond 80% of its value. The stock is now considered to be a risky investment by many and is at the risk of falling below $1 per share.