High Tide Has A Killer Business Model

2025-03-03 16:32:34 ET

Summary

• High Tide Inc. is a discount cannabis retailer with 192 brick & mortar storefronts in Canada.
• They were forced to adapt or die in Canada's tough ecosystem and have since emerged as its most dominant player.
• Their business model uses the collective bargaining power achieved by their scale to negotiate better deals for their customers.
• Modified PEGY estimates indicate the company is significantly undervalued.
• I presently rate HITI as a Strong Buy.

Thesis

High Tide Inc. ( HITI ) is a best-in-class specialty retailer with huge growth potential. They are armed with an extremely competitive business model and should be able to capture significant market share in any ecosystem they are allowed to enter. Because their customer capturing business model is coupled with a low cost of expansion, I believe High Tide is well positioned to become the most attractive long-term compounder in the cannabis industry.

In this article I will cover several key developments which have taken place since my article from over a year ago . Even though the share price has almost doubled since then, after reviewing their business model, financials, and valuation, I still rate High Tide as a Strong Buy.

A History Of Excellence

High Tide was founded by Raj Grover under the name Smokers Corner in 2009. Originally, its core business centered around importing glassware for the Canadian market. Starting with a single store and two employees, Raj Grover incorporated flower and concentrates into the business model after Canada went full recreational (late 2018), rebranded the storefronts from Smokers Corner to Canna Cabana, took the company public (early 2019), and then began rapidly expanding its footprint . They switched to a discount model in late 2021 and then added a Costco-style paid membership option in late 2022 ....

Read the full article on Seeking Alpha

For further details see: