It’s earnings season for marijuana stocks and, as usual, the financial media are going to drag investors into the insignificant details of quarterly earnings reports.
Here’s a chart which will make sure you avoid all this noise and stay focused on the big opportunities still being created in the legal marijuana industry.
This week we’re going to get a look at the hard numbers showing how fast (or slow) the marijuana boom is playing out.
Legal marijuana majors Canopy Growth (CGC), Tilray (TLRY), and Aurora Cannabis (ACB) all report this week.
Aurora went first. Top line revenues came in at $62 million, an increase of 109% from the previous quarter and a 430% increase from the same period a year ago.
Of course, the margins shrank. Aurora is a major cultivator and, as the marijuana market matures, the value and earnings will be going to the companies with brands and end-use products, not the growers of a an increasingly commodified product.
But don’t buy the hype in these earnings reports.
They will all show the obvious and predictable trends of big top line and growth and declining value of cultivation.
Instead, you should focus on something much more important to the future of marijuana.
That’s the long-term expansion of the potential market.
Here’s a chart which shows exactly what means.
This chart below shows how the market expands over time as marijuana markets mature and the product becomes more socially acceptable.
There trend is clear – the more mature a legal marijuana market becomes, the greater percentage of the population becomes consumers.
This is the most important trend for marijuana stock investors.
Keep it in mind while most of the headlines will be around earnings reports and deep dives into what all the numbers mean.
It’s all small potatoes to the big, overwhelming trends which will dominate the marijuana industry for years to come.
They are massive and consistent growth in market size and the rise of branded and value-added products taking up an ever greater share of the market.