Posted on November 30, 2020 by Florian Buschek
…into the close and after hours. DTEA (disclosure: long stock and call options) had a very good day probably due to speculation about a cannabis partnership and this tweet announcing something special tomorrow. The image looks like a subscription box.
This would be great timing for Christmas since Q4 is by a very wide margin the strongest quarter, with roughly double the sales volume of all other quarters. If DTEA can use Christmas to build a large base for subscriptions, that would extremely bullish because it would improve the unit economics substantially and at a low customer acquisition cost on top.
Also, don’t forget that the CCAA (Companies’ Creditors Arrangement Act) proceedings have been extended to December 15, 2020. Then we will know how the negotiations with the landlords have turned out and the business will have access to capital again. This will help boost inventory and therefore sales. It will also remove any doubt about DTEA’s ability as going concern and the balance sheet will look extremely strong after getting rid of the lease liabilities. With the move from predominantly offline to online and wholesale by closing the unproductive stores and paying off the landlords cheaply, DTEA remains dramatically undervalued.