The so-called “Meme Stock” revolution is upon us. Retail investors and social media trading “gangs” are ganging up on institutional hedge fund shorts and bears with massive implications for the publicly traded stock market.
We have seen it take an undeniable shape in stocks like GameStop Corp (NYSE: GME) and AMC Entertainment Holdings Inc (NYSE: AMC) over recent weeks and months. We have also seen inklings of the same phenomenon in the cannabis space. One might also point out the popularity of a number of stocks in this space on the r/WallStreetBets Reddit platform, which has been something like Ground Zero for the meme stock dynamic.
We would also note that the notion of “underdog growth theme” is a sort of spiritual touchstone idea that seems to undergird this phenomenon. And the cannabis space might be said to resonate with this idea in powerful ways. The overall space is growing gangbusters and has been for years. Experts continue to place it at or near the top of the industry growth rankings.
Grand View Research recently came out with a new analytic take, noting that the global legal marijuana market size was valued at $9.1 billion in 2020 and is now expected to expand at a compound annual growth rate (CAGR) of 26.7% from 2021 to 2028, suggesting that the space could be worth over $60 billion by that time.
This has strong implications for stocks in the space, including Aurora Cannabis Inc (NYSE: ACB), Canopy Growth Corp (NASDAQ: CGC), Tilray Inc (NASDAQ: TLRY), GrowGeneration (NASDAQ: GRWG), Sugarmade Inc (OTC US: SGMD), and Sundial Growers (NASDAQ: SNDL).
We take a more detailed look at several of the most interesting players below.
Sundial Growers Inc (NASDAQ: SNDL) is a licensed producer that crafts cannabis using state-of-the-art indoor facilities. The stock was a momentum favorite earlier this year, but it has declined sharply and now has some important support levels in play.
Sundial’s brand portfolio includes Top Leaf, Sundial Cannabis, Palmetto, and Grasslands. Our consumer-packaged goods experience enables us to not just grow quality cannabis, but also to create exceptional consumer and customer experiences.
Sundial Growers Inc (NASDAQ: SNDL) recently announced, along with Inner Spirit Holdings Ltd (OTCQB: INSHF), that the two companies have entered into an arrangement agreement pursuant to which Sundial will acquire all of the issued and outstanding common shares of Inner Spirit for total consideration of approximately $131 million. According to the release, the combined company will continue to focus on providing quality cannabis to consumers through a responsible and disciplined approach while creating enduring value for shareholders.
“Sundial becomes a stronger and more diverse cannabis company by acquiring Inner Spirit and the Spiritleaf retail store network,” said Zach George, Chief Executive Officer of Sundial. “Inner Spirit has successfully created a franchise-based retail network that has grown from coast to coast and offers a differentiated and premium in-store experience to consumers. Our shared Albertan roots and commitment to data-driven consumer insights make for an ideal partnership. Sundial’s capital base will enable us to support continued expansion and deepen the capabilities of the Spiritleaf retail brand.”
It will be interesting to see if the stock can break out of its recent sideways action. Over the past week, the stock is net flat, and looking for something new to spark things. Shares of the stock have powered higher over the past month, rallying roughly 54% in that time on strong overall action.
Sundial Growers Inc (NASDAQ: SNDL) managed to rope in revenues totaling $7.8M in overall sales during the company’s most recently reported quarterly financial data — a figure that represents a rate of top-line growth of -54.4%, as compared to year-ago data in comparable terms. In addition, the company has a strong balance sheet, with cash levels far exceeding current liabilities ($721.7M against $77.1M).
Sugarmade Inc (OTCMKTS: SGMD) is in prime position to become an increasingly visible player in the cannabis space in the months ahead given its advantageous execution as a rapidly growing force in the cannabis delivery marketplace in California so far this year through its major interest in BudCars, one of the fastest-growing vertically integrated cannabis delivery players in the space.
SGMD is a product and branding marketing company investing in operations and technologies with disruptive potential. Its Brand portfolio includes CarryOutsupplies.com, SugarRush, Nug Avenue, and Budcars.com.
Sugarmade Inc (OTCMKTS: SGMD) announced, earlier this morning, the signing of a Memorandum of Understanding (the “MOU”) to obtain three non-storefront California Cannabis licenses from the Los Angeles Department of Cannabis Regulation, along with corresponding licenses from the California Bureau of Cannabis Control, which collectively provide the licensing foundation for the opening of three (3) new Nug Avenue cannabis delivery hubs in the Los Angeles metro area.
According to the terms of the MOU, the Company will control a joint venture created with the initial holder of the social equity license as of the closing date of the definitive agreement.
Each of the three licenses can be used for three of the five categories of licensed cannabis-related business activities allowed under the terms of these licenses: retail delivery, manufacturing, distribution, transport-only, and cultivation. The Company has determined it will most likely use each license for a combination of 1) retail delivery of cannabis products, 2) supply chain distribution of cannabis products and 3) for manufacturing/packaging of cannabis products.
Together, these licenses provide the licensing foundation for the opening of three (3) new Nug Avenue locations in the Los Angeles metropolitan area.
“Our first Nug Avenue location has been a tremendous success, but we need to expand due to overwhelming demand,” commented Jimmy Chan, CEO of Sugarmade. “Holding these licenses will provide an optimal solution to our current growth limitations.”
Sugarmade Inc (OTCMKTS: SGMD) shares are acting well over the past five days, up about 17% in that timeframe. Shares of the stock have powered higher over the past month, rallying roughly 35% in that time on strong overall action.
GrowGeneration Corp (NASDAQ: GRWG) trumpets itself as a company that owns and operates retail hydroponic and organic gardening stores in the United States.
The company has been growing rapidly through a series of key strategic moves and now carries and sells thousands of products, including organic nutrients and soils, advanced lighting technology, and state-of-the-art hydroponic equipment to be used indoors and outdoors by commercial and home growers.
GRWG recently announced a new partnership with Belushi’s Farm to outfit its newest greenhouse. Based in Oregon, Belushi’s Farm was founded in 2015 by performer Jim Belushi to cultivate premium medical and recreational cannabis, producing signature brands such as Belushi’s Secret Stash, The Blues Brothers, and Captain Jack’s (also known as “The Smell of SNL”).
“We’ve spent several weeks on the ground in Oregon working with Jim and his exceptional team at Belushi’s Farm working on plans and visiting our retail locations for top-grade supplies,” said Jeremy Corrao, Vice President of Commercial Operations at GrowGeneration. “Our team of growing professionals are experts in cannabis-growing techniques, and we’re excited to support Jim’s vision with GrowGeneration’s unparalleled supplies and services.”
Even in light of this news, GRWG hasn’t really done much of anything over the past week, with shares logging no net movement over that period.
GrowGeneration Corp (NASDAQ: GRWG) managed to rope in revenues totaling $90M in overall sales during the company’s most recently reported quarterly financial data — a figure that represents a rate of top-line growth of 172.9%, as compared to year-ago data in comparable terms. In addition, the company has a strong balance sheet, with cash levels far exceeding current liabilities ($133.1M against $45.7M).
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