Decibel’s $10M Strategy: How It Could Enhance Your Canadian Cannabis Portfolio
Decibel Cannabis Co. (OTC:DBCCF), the Canadian cannabis brand that dominated the pre-roll market in 2023, now trades at 0.8x CY24 sales and 4.2x adjusted EBITDA, with a market valuation that senior analyst Pablo Zuanic finds compelling. As Canada’s fourth-ranked player, Decibel holds a significant position in infused pre-rolls and vape products.
The company, guided by CEO Benjamin Sze, is expected to stabilize its core franchises by the fourth quarter and potentially grow through a strategic re-entry into domestic recreational flower markets and increased exports.
Canadian Cannabis: Performance And Market Dynamics
In the second quarter of 2024, Decibel reported a 19% year-over-year drop in domestic recreational sales, totaling $22.1 million, in a slightly declining market. This performance marked the second consecutive quarter of year-over-year sales decline, largely due to losing market share in the infused pre-roll and vape segments.
Adjusted EBITDA margins fell to 18% from a peak of 27% in early 2023, driven by reduced gross margins and an increase in selling, general and administrative expenses, which now represent 34% of sales.
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