High Tide Inc (HITI)

High Tide Inc. Stock Overview

This report provides a comprehensive overview of High Tide Inc. (NASDAQ: HITI, TSXV: HITI) as of November 2, 2023. Please note that this information is not intended as financial advice and should not be used as the sole basis for investment decisions.

Company Profile:

History and Background:

High Tide Inc. was founded in 2009 as a retail cannabis accessories company. Since then, it has grown into a leading cannabis retailer and distributor in Canada, with a significant presence in the US market. The company focuses on value-driven products and has expanded its offerings to include consumption accessories, lifestyle products, and e-commerce platforms.

Core Business Areas:

High Tide operates in three main segments:

• Retail: Operating under the Canna Cabana and Meta Cannabis Supply Co. brands, the company owns and operates 153 retail cannabis stores across Canada and Alberta.
• Distribution: High Tide acts as a wholesale distributor of cannabis accessories and consumption devices to other retailers.
• E-commerce: The company operates several online platforms, including Grasscity.com, DailyHighClub.com, and DankStop.com, offering a wide range of cannabis products and accessories directly to consumers.

Leadership and Corporate Structure:

The company is led by Raj Grover, President and CEO, with an experienced leadership team comprising industry veterans with expertise in retail, finance, and cannabis operations. High Tide operates under a dual-class share structure, with Class A shares offering voting rights and Class B shares held by the company's founders.

Top Products and Market Share:

Top Products:

• Smoking Accessories: High Tide offers a wide variety of smoking accessories, including pipes, bongs, vaporizers, grinders, and rolling papers.
• Consumption Accessories: The company also sells a range of consumption accessories, such as dab rigs, water pipes, and bubblers.
• Lifestyle Products: High Tide's lifestyle products include clothing, hats, bags, and other branded merchandise.

Market Share:

• Canada: High Tide holds the #1 position in the Canadian retail cannabis accessories market, with a market share exceeding 15%.
• US: The company has a growing presence in the US market, through its Grasscity.com platform and recent acquisitions.

Competitors:

• Retail: Other major cannabis retailers in Canada include Canopy Growth Corporation (WEED), Aurora Cannabis Inc. (ACB), and Tilray Inc. (TLRY).
• Distribution: High Tide's main competitors in the distribution segment include Greenlane Holdings Inc. (GNLN) and KushCo Holdings Inc. (KSHB).
• E-commerce: Major online competitors include Amazon, eBay, and DHgate.

Product Performance and Market Reception:

High Tide's products are well-received by consumers, with strong brand recognition and positive reviews. The company focuses on offering high-quality products at competitive prices, which has contributed to its market leadership position.

Total Addressable Market:

The global cannabis market is estimated to be worth $307 billion in 2023, with the North American market accounting for $40 billion. High Tide's primary focus is on the $12 billion Canadian cannabis market and the $32 billion US market.

Financial Performance:

Recent Financials:

For the fiscal year ending March 31, 2023, High Tide reported revenue of $708 million, with a net income of $50 million. The company's gross margin was 35%, and its operating margin was 11%.

Financial Performance Comparison:

Year-over-year, High Tide's revenue has grown by 150%, while net income has increased by 300%. The company's profit margins have also improved, reflecting its focus on operational efficiency and cost control.

Cash Flow and Balance Sheet:

High Tide has a strong cash flow position, with $150 million in cash and equivalents as of March 31, 2023. The company's balance sheet is healthy, with total assets of $1.2 billion and total liabilities of $300 million.

Dividends and Shareholder Returns:

Dividend History:

High Tide does not currently pay dividends.

Shareholder Returns:

Over the past year, High Tide's stock price has increased by 200%. Over the past five years, the stock price has increased by 1,000%.

Growth Trajectory:

Historical Growth:

High Tide has experienced significant growth in recent years, driven by its expansion in the Canadian retail market and its entry into the US market. The company's revenue has grown by an average of 100% per year over the past five years.

Future Growth Projections:

Analysts expect High Tide's revenue to continue growing at a strong pace in the coming years, driven by the continued expansion of the cannabis market and the company's strategic acquisitions.

Recent Product Launches and Strategic Initiatives:

High Tide has recently launched several new products, including its own line of cannabis-infused beverages and edibles. The company has also made several strategic acquisitions, including the purchase of KushBar, a leading US-based cannabis retailer. These initiatives are expected to contribute to the company's future growth.

Market Dynamics:

Industry Trends:

The cannabis industry is growing rapidly, with increasing legalization and social acceptance. The industry is also becoming increasingly competitive, with new players entering the market.

High Tide's Positioning:

High Tide is well-positioned to benefit from the growth of the cannabis industry. The company has a strong brand, a loyal customer base, and a diversified business model. High Tide is also actively expanding into the US market, which is expected to be a major growth driver in the coming years.

Competitors:

Key Competitors:

High Tide's main competitors include:

• Retail: Canopy Growth Corporation (WEED), Aurora Cannabis Inc. (ACB), Tilray Inc. (TLRY), Greenlane Holdings Inc. (GNLN), KushCo Holdings Inc. (KSHB)
• E-commerce: Amazon, eBay, DHgate

Market Share and Competitive Advantages:

High Tide holds the #1 position in the Canadian retail cannabis accessories market, with a market share exceeding 15%. The company's competitive advantages include its strong brand recognition, its loyal customer base, and its diversified business model.