Backgound on PlantX
PlantX Life Inc. (CSE:VEGA, OTC:PLTXF) is a plant-based retail brand based out of Vancouver, Canada. The company was established in 2019 by Sean Dollinger, and has grown to be one of the leading eCommerce platforms in the Canadian plant-based market. Since its inception in 2019, PlantX has rapidly grown through acquisitions of peers like Bloombox Club and Portfolio Coffee, and has signed on globally recognized spokespeople like Venus Williams and Justin Fields.
With the global spread of plant-based and vegan culinary trends, PlantX has hit upon a potential multi-billion dollar market. Not only does PlantX have an established eCommerce network, it also has strategically developed flagship brick and mortar locations in markets around the world. Some of its major hubs include Vancouver, Venice Beach, California, and Tel Aviv, Israel.
On top of its retail business, PlantX is also building its premium subscription membership service called XVIP. This membership costs $29.99 per month and includes special sales, discounts, and even fitness classes through its XFitness channel. PlantX is fast becoming a major player in the global plant-based industry, and with its aggressive growth strategy, the results are starting to show.
PlantX announces record revenues for march
PlantX recently announced its financial results for the month of March 2022. The company once again reported a record-breaking month for revenues providing further proof that its growth strategies are yielding the type of results shareholders and analysts love to see. Gross revenues in March reached a figure of $1,719,577 CAD which represents a 28% sequential growth from the month of February. It is also a staggering 168% year over year increase, net of wholesale revenue, from March of 2021.
Dollinger noted that there are several factors that are contributing to the ongoing growth of PlantX, including its continued focus on strategic partnerships and intra-industry acquisitions. Further to this, Dollinger pointed at PlantX’s growing loyal customer base which is likely a reference to its XVIP service. While specific figures were not provided on membership growth, PlantX is investing heavily in the products and services for XVIP members.
This PlantX strategy of identifying strong brands and businesses within the plant-based industry has been a continued strength from management. For booming industries like eCommerce and retail, organic growth has always taken a back seat to mergers and acquisitions. It is simply a faster and more direct route to enterprise growth and it is one that PlantX has truly figured out.
While it is certainly establishing its own brand in the market, PlantX has been notably aggressive in acquiring smaller companies that help augment its own platform. Some of these include the aforementioned Bloombox and Portfolio Coffee, but also include Locavore, New Deli, and Little West. Absorption of these brands into the PlantX umbrella has provided an exponential growth of its customer base and is transforming PlantX into a growing juggernaut in the space.
PlantX and besties announce new strategic partnership
In late March, PlantX announed a new strategic partnership with the popular vegan brand, BESTIES. What exactly is BESTIES? It is one of the leading vegan grocers in the United States and has been awarded the ‘Best Grocery Store’ by the VegNews Veggie Awards for two consecutive years. It is located in Los Angeles, California and is a proudly female-owned and cruelty free brand that services everything in the plant-based industry.
What will this partnership look like? It is a complete rebranding of PlantX’s California locations that will now be doing business under the BESTIES name. This includes its locations in Venice Beach, and Hillcrest, California, which will now be renamed to BESTIES and sell some of BESTIES exclusive house brands. Not only will this bring BESTIES customers into PlantX’s ecosystem, but it will allow customers of each brand to experience a broader selection of products and services. For PlantX shareholders, it is obviously an exciting opportunity to further add new members to the XVIP subscription service.
Initial results have been promising as the Venice Beach rebranding to BESTIES has triggered a 30% rise in monthly sales. PlantX is clearly benefiting from the renowned BESTIES brand in California, and BESTIES is benefiting from the added retail space. A successful partnership for both companies shows how well management on both sides are executing. PlantX’s continued focus on mergers and acquisitions to consolidate the plant-based industry is already paying dividends to both the company and its shareholders.
Is PlantX a good investment?
So all of this news leads to the real question for PlantX’s stock: Is it a good long-term investment right now? Shareholders will know that despite all of the headlines and growth, 2022 has not been a great year for the stock. Shares of PlantX are down by 22.5% on the OTC markets, and are currently trading at just slightly above the 52-week low price of $0.13 per share. The stock has a 52-week high price of $0.68 per share which it reached back in April of 2021. Over the past year, shares are down nearly 72.0% in total.
For value investors, PlantX’s stock is sitting at a classic position of potential growth moving forward. PlantX has not been the only stock that has been suffering in 2022, and broader macroeconomics factors have led to massive downward pressure on all of the broader markets. Not only has the OTC market suffered, but the benchmark S&P 500 has seen a massive correction and the NASDAQ has dipped into bear market territory.
General market weakness has a tendency to be the tide that lowers all ships. It’s not just companies with high valuations that are brought lower, every stock gets slashed during a correction. So what does this mean for PlantX? Targeting companies that are trading at depressed valuations with high revenue growth and sales expansion is an excellent strategy for entry points into new stocks.
Some quick off the cuff math shows that even if monthly revenues were to stay at about $1 million for the next year, PlantX is currently trading at a forward looking price to sales ratio of just over 2. That’s not a terrible valuation at all for a company that just reported 168% year over year revenue growth. Factor in that PlantX is continuing to pursue further partnerships and acquisitions, like the one with BESTIES, and enterprise growth should be sustainable at an even higher rate moving forward.
PlantX is in the unique position where its trailing valuation has yet to catch up with its stock price. PlantX has the potential to be one of the global leaders in plant-based retail and services. Current price levels are likely going to look like a discount several years from now.