In the modern world digital technology, online forums can have the same amount of impact on a stock’s development as white-shoe investment companies. Reddit investors continue to discuss cannabis companies’ growth prospects.
Among the cannabis companys that continue to receive positive feedback from Redditors are Curaleaf, Tilray, and Sundial Growers, who stand out for the volume of comments they produce. While the January and February stock market excitement has faded, these three cannabis stocks continue to enjoy widespread investor backing.
A Bright Spot in Cannabis Stocks
Eric Volkman says that one “weedie” is among the most-mentioned Reddit stocks is the Massachusetts-based Curaleaf.
Volkman says it’s obvious why people on general-interest stock market subreddits and those devoted to cannabis stocks keep a close eye the company.
The company is headquartered in the United States. where it conducts virtually all of its business. If everything goes well, the U.S. will develop into the world’s largest and most lucrative market for legal cannabis. Canada is the only other large cannabis market, but it is relatively tiny, very competitive, and impeded by obstacles.
Being almost solely an American business, and a sizable one, Curaleaf hopes to benefit significantly from legalization in the U.S.
As legalization progresses, it will eventually become the norm instead of the exception in the states. There is too much public support for it not to happen.
Curaleaf is large enough that its fundamentals will alter substantially when state and federal cannabis laws become more lenient to cannabis. The company operates in 23 states and runs 109 shops that sell recreational and medicinal cannabis. Curaleaf also has 23 cannabis farms and 30 production plants.
Curaleaf operates with consistent losses, largely due to its voracious hunger for purchases.
However, net losses have already been reduced recently as the company recorded a $7.2 million deficit in the most recent quarter, which was a significant improvement from the prior quarter’s loss of more than $17 million, surpassing the preceding two quarters.
Meanwhile, Curaleaf continues to expand its revenue by double digits quarter after quarter. In the second quarter, it increased by 20%, mirroring its expanding footprint and organic growth in key markets, like Massachusetts, where cumulative cannabis sales recently surpassed the $2 billion goals less than three years after the recreational cannabis market opened.
The cannabis industry can do nothing but grow, although most of that progress won’t come right awau. Considering that Curaleaf is a well-diversified and active company, it is sure to profit.
A Popular Penny Stock
Sundial Growers is more than a regular cannabis business. While the company produces and sells cannabis, it also has an investing arm to acquire interests in smaller rivals, which is one of the company’s unique characteristics.
Besides appearing in the top debates on popular subreddits like WallStreetBets, Sundial also is the subject of two dedicated subreddits, the largest of which has about 63,800 followers. While Sundial is not the most discussed cannabis stock on Reddit, it’s notable because of the very favorable attitude expressed by its supporters on the site.
Even though some caution is warranted, negative remarks about the company’s prospects are few. Regardless, Redditors frequently talk about the grade, revenue, and distribution of the company’s cannabis goods rather than one of the company’s greatest assets: investment income.
Sundial earned $5.7 million in net investment and fee revenue in the second quarter, and $3.7 million in profits equity from investors. This implies that it made more money through investment than it did from cannabis sales, which totaled just $9.2 million within the same period. As a result, a company may prosper and grow on the strength of its investment revenue even if its marketed cannabis products are unpopular with customers or are sold in a limited number of markets.
Additionally, management is eager to continue growing its revenue-generating initiatives to utilize its approximately $1.3 billion cash hoard. Sundial purchased $300,000 worth of multi-state cannabis company Valens GroWorks shares on September 17. Valens has operations in the United States and Canada. Sundial already owned 9.99 percent of the company’s shares.
Preliminary discussions on Reddit may indicate that Sundial’s acquisition is yet another prudent decision.
Cannabis Stock Worth Waiting For
Despite continued support from the Reddit crowd, Tilray stock continues to move on a downward trend. While Tilray’s shares are 45% higher than at the beginning of 2021, mostly due to January and February’s meme stock trading frenzy and its acquisition of Aphria, the company has lost nearly half its value in the past six months.
But traders on Reddit can’t stop raving about Tilray’s potential, especially since it bought a sizable interest in MedMen, a multi-state business with 21 permits and 25 retail locations, including Los Angeles, Boston, and Chicago, last month. Their investment in Tilray is not ill-advised.
Tilray is the largest cannabis manufacturer in Canada by sales following the Aphria acquisition. Its $5.3 billion market capitalization places it right behind Canopy Growth, which has $5.5 billion.
Additionally, Tilray has a global reach that few companies can match because of its recreational, medicinal, and pharmaceutical distribution. While each sector is now segregated mostly by geography, recreational cannabis is primarily found in Canada, medicinal cannabis is found in Europe and Australia, and pharmaceutical operations are mainly found in Germany. The goal is to have them all intersect ultimately.
While Tilray already has a presence in the United States via its collaboration with Anheuser-Busch InBev and Aphria’s past ownership of Stillwater Brewing, the MedMen asset gives Tilray access to some of the most valuable cannabis markets in the country, like California and Florida. However, that will not happen until federal legalization comes, and while there appears to be a growing agreement that it will occur soon, it is far from a reality at this point.
Nonetheless, MedMen’s revenues increased by 55% in the second quarter. The company reduced its losses considerably and posted a $41.7 million operational loss for the period, down from a $279 million loss a year before.
Tilray is expanding as well, with revenue up 27% and an adjusted EBITDA of $12.3 million. This number indicates that the cannabis stock deserves the hype generated in online chat rooms, though it may take time to reach its full potential.