OUR 9TH YEAR OF PROVIDING PROPRIETARY CAPITAL MARKETS INTELLIGENCE ON THE CANNABIS / HEMP / PSYCHEDELIC SECTORS
Quick
Links
Past Charts
Chart of the Week
Chart of the Week
The Viridian Capital Chart of the Week highlights key investment, valuation and M&A trends taken from that week’s Deal Tracker that we believe are impactful for investors, companies and acquirers.
Week ended 09/06/2024
Viridian Capital Chart of the Week: What Will it Take to Re-ignite Cannabis Stock Prices
-
- Last week’s Viridian Chart of the Week explored the historical path of valuation multiples for the six largest MSOs, with the surprising conclusion that multiples for half of the group are now lower than they were prior to the HHS announcement of S3.
- This week’s Chart explores current stock prices for a larger group of eighteen MSOs to see how current stock prices compare to 52-week Lows and Highs. We then ponder the possible catalysts for rerating.
- The top of the green bars show the stock prices on 9/6/24 as a percentage of their 52-week low. The top of the red bars shows current prices as a percentage of the 52-week highs.
- Companies with small green bars are trading close to their 52-week lows, while companies with small red bars are trading close to their 52-week highs. The graph is arranged in increasing order of current prices as a percent of 52-week lows.
- Eight of the eighteen cultivation companies including TerrAscend (TSND: TSX), Verano (VRNO: Cboe), 4Frront (FFNT: CSE), Schwazze (SHWZ: CSE), Curaleaf (CURA: TSX), Gold Flora (GRAM: CSE), MariMed (MRMD: CSE), and Ascend (AAWH: CSE) are trading at less than 20% premiums to their 52-week lows. Ten companies are trading at less than 50% of their 52-week highs.
- Conversely, the five MSOs on the right side of the Chart, including Planet 13 (PLTH: OTCQX), AYR (AYR.A: CSE), GlassHouse (GLASF: CSE), Trulieve (TRUL: CSE), and Verano (VRNO: Cboe) are trading at a median of 233% of their 52-week lows. It is not a coincidence that four of the five have significant torque to a positive Florida adult use result.
- Are there any observable potential catalysts that might turn this picture around? Several investors we have spoken to have high hopes for the upcoming presidential debate, but we have doubts. We thought that the positive comments Trump made about cannabis last weekend might move the needle, only to be disappointed by a lukewarm reception. The market has been spoofed too many times by political posturing. Moving the needle will require actual regulatory or legislative changes, which seems stalled until after the election.
- A return to previous highs and beyond may require new money to enter the market. Unfortunately, S3 by itself is unlikely to get us there. We need to see a bipartisan movement toward something similar to SAFE, only expanded to include the securities industry rather than just banks. S3 and SAFE together are likely to lead to uplistings, greater liquidity, and the entrance of new institutional investors. Is it too early to write our list for Santa? We desperately want to believe.
