How does the deal impact High Tide's short‑term and long‑term valuation multiples (P/E, EV/EBITDA) compared to peers?
Short‑term impact – compression of valuation multiples
The acquisition adds a €65 million revenue stream and a proven sales pipeline (7 t fl ≈ 16 % of Q2‑2025 German imports). Assuming a modest 15 % EBITDA margin on the new business, High Tide’s FY 2025 EBITDA will rise by roughly €9.8 million. With the transaction being financed largely on cash and a small equity‑raise, the balance‑sheet impact is limited, so the market will view the deal as a pure earnings boost. Consequently, the current P/E and EV/EBITDA will fall (i.e., compress) toward the mid‑range of the European‑medical‑cannabis peer set (EV/EBITDA 8‑10× versus the sector’s 12‑14×). In the next 3‑6 months the “earnings‑catch‑up” effect should push High Tide’s multiples below its historical premium, creating a short‑term pricing discount relative to peers.
Long‑term impact – re‑rating on growth premium
In a longer horizon the German market is still nascent; High Tide now controls a 16 % share of the country’s imported flower volume and gains a foothold in a regulated pharma‑grade pipeline. If the company can expand the margin to 20 %+ as scale and cost‑efficiencies materialise, FY 2027 EBITDA could be 1.5‑2× the FY 2025 level. The higher growth trajectory will justify a re‑rating of the P/E and EV/EBITDA back toward the high‑growth tier of the peer group (EV/EBITDA 12‑14×, P/E 25‑30×). Thus, while the deal initially compresses multiples, the longer‑term outlook should generate a valuation premium as the market prices in superior top‑line growth and improved profitability.
Trading implication
The near‑term multiple compression creates a buying opportunity: a dip in HTID’s price as the market digests the earnings uplift can be captured with a short‑position in the broader market or a long‑position in HTID at a discount to peers. As the German franchise matures and margins expand, the re‑rating will likely lift the stock back to a premium, supporting a medium‑to‑long‑term upside. A tactical approach is to go long HTID on the short‑term dip, targeting a 12‑15 % rally as EV/EBITDA re‑expands toward the sector’s growth premium over the next 12‑18 months.