Green Thumb Industries Stock News and Forecast: GTBIF shares drop over 8%

Green Thumb Industries (GTBIF), the purveyor of a number of self-grown and manufactured cannabis brands as well as the owner of 66 Rise dispensaries, sold off heavily on Wednesday. GTBIF shares closed down 8.2%, putting it below the psychological level of $20.

Green Thumb Industries (GTBIF) Stock News: Positive Q3 earnings already forgotten

Doubling net income in the third quarter has not helped the GTBIF share price. Though the stock jumped over 30% on the news in mid-November, it has since gone back to its descending pattern, which has been in place since August. While $0.08 in earnings per share was a penny shy of consensus, 49% YoY revenue growth should have impressed the market more.

Unlike most cannabis growers, Green Thumb has now reported five consecutive quarters in a row of positive net income. S&P 500 here we come! This unusual profitability in an industry known for enormous losses in an attempt to grow market share has given Green Thumb an unusual unanimity in terms of positive analyst sentiment. Twelve out of 12 analysts seen by FXStreet have Buy or Overweight ratings on GTBIF. The consensus price target is above $36 as well, which provides about 80% upside at the current price.

Pennsylvania, where Green Thumb operates more than a dozen stores, has issued a new edict that operators must get all vaporized products that include additives reapproved by the state. Though the due date was November 30, Green Thumb has not announced whether their own vaporized products were reapproved.

Much of the optimism concerning a federal cannabis legalization law has dried up in the US since President Joe Biden has signalled his disapproval of recreational decriminalization. Still, US Rep. Nancy Mace (R-South Carolina) is pushing her bill to legalize the sale with a 3.75% federal excise tax levelled on top. Most pundits, however, think it doubtful that the bill can make it through the Senate.

Green Thumb is already established in New York, New Jersey and Virginia, where legislatures only recently legalized recreational use. It plans on expanding to 18 states in the near future. Currently, it is active in 13.

GTBIF key statistics

Green Thumb Industries (GTBIF) Stock Forecast: Support comes at $18.40

Though FXStreet agrees with Wall Street's love affair with GTBIF, the short-term prospects do seem worrisome. Luckily, strong support is nearby at $18.40. This level held nicely from November 3 to 5, and we would expect it to do so once more. If not, $16.70, which served as resistance in November 2020, could turn around and offer support.

Much of the downward pressure on the stock seems to be coming from compressed valuation multiples due to Federal Reserve tapering and talk of raising interest rates. Since this pressure applies to most growth stocks, long-term investors should not take it to heart. Going long at $18.40 may be the right move if a tight stop is used.

In order to turn this train around, GTBIF price needs to close above the 20-day moving average for a change. At the moment the moving average sits at $22.16. After that bulls would need to push GTBIF above the November 29 high of $24.97 to see any future optimism toward share price.

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