OrganiGram Holdings Inc (NASDAQ:OGI) Stock Pulls Back Sharply: Here is Why

OrganiGram Holdings Inc (NASDAQ:OGI) hasn’t been an attractive investment over the past year. Growth hasn’t been robust even when sales were low from previous quarters, which is unsuitable for unprofitable businesses. In July, investors received great news after the company reported 51% QoQ sales growth in its Q3, leaving them wondering whether the pot stock has turned a leaf.

Investors should note that the gross revenue was CA$29.1 million for the period ended May 31 that comes ahead of excise taxes. OrganiGram had net revenue of CA$20.3 million, which is a 39% QoQ increase.

Interestingly having a bad quarter could easily a not-so-good performance seem great. Nevertheless, net revenue in Q3 2021 was up 13%, resulting in a gross margin of CA$2.1. In the coming quarter, the company anticipates an improvement in gross margin as it has identified several cost efficiency measures that will enhance profit margin. But rising SG&A costs could make it even harder to achieve profitability because even if OrganiGram enhances gross margin, it cannot cover all its expenses. So in the coming months, OGI is worth watching.

Market Reaction:

On Monday, OGI stock slumped 14.50% to $2.48 with more than 9.64 million shares, compared to its average volume of 6.15 million shares. The stock has moved within a range of $2.4800 – 2.8200 after opening the trade at $2.80.