Cresco Labs Price Analysis December 2022

At the time of writing, the share price for Cresco Labs Inc. (CRLBF) reached $2.54, a 0.1 decrease in share price and a 3.79% decrease overall in the last 24 hours. What’s more, the price of stock has trended downwards since December started, and it doesn’t look like it will recover soon.

Let’s analyze Cresco Labs past performance and current stock trend to get a good look at how it will perform going into 2023.

Technical Analysis

The Cannabis industry potential for earnings has been widely discussed, but the value and profitability of these companies, including Cresco Lab, is still subject to many limitations at the federal level.

While the overall attitudes towards marijuana seem to be shifting in the States and Washington in general, the Cannabis industry suffered a blow when a proposed banking legislation failed to pass earlier this month. 

However, a recent setback occurred when the SAFE Banking Act, which would make it easier for Marijuana companies to seek the services of banks and end the cash-only limitations. The Cannabis industry in general was trending bullish as it looked like the act would pass, but after it didn’t amount to much it trended downhill.

This is reflected in Cresco Labs performance over early December:

Cresco Labs performance during December. Chart by Yahoo Finance.

Cresco Labs was trending back up, rising to $4.15 by December 5th, but when negotiations for the SAFE Banking Act turned sour the price plummeted to $3.31 in a day, a 20% decrease in value. And it has only trended downwards since, and it doesn’t look like things will change soon.

The performance of the stock over the five, twenty, and fifty day period shows that it’s only trending downwards:

• Five day period: $2.78 moving average, with a 0.71 price decrease and an overall -21.65% percent change
• Twenty day period: $3.25 moving average, with a 0.88 price decrease and an overall -25.48% percent change
• Fifty day period: $3.24 moving average, with a 0.14 price decrease and an overall -5.17% percent change

Overall, Cresco Labs hasn’t been doing bad, but definitely not as good as expected.

The company reported revenue of $210 million for the third quarter, down 2% year-over-year, according to their press release this was due to no longer being a 3rd party distributor in California, increased verticality by retailers, and price compression. 

In addition, they revealed that retail revenue increased 11% year-over-year to $118 million, or an average of $2.35 million per store open in the quarter, and cash on hand increased by $26 million to $130 million.

However, things could turn around if the planned Columbia Care acquisition is approved. Currently, the merger is being subjected to regulatory reviews and is expected to finish by the end of the first quarter of 2023.

According to analysts, Cresco Labs Inc has a median target of $6.49 for 2023, with a high estimate of $15.00 and a low estimate of $3.57.

This would make Cresco Labs a substantial multi-state operator, make it a market share leader in key states, and increase its national footprint.

However, as it stands right now, all indicators show Cresco Labs as a weak stock with a propensity for Sell.

Cresco Labs Analysis Conclusion

Cresco Labs could potentially have a great 2023 if its merger with Columbia goes through, and the SAFE Banking Act does end up getting approved, but as it stands right now the stock is quickly plummeting and doesn’t show any signs of recovering for the rest of the month.