Monday Issuing Stock: Shareholder Impact ~

Cash Flow and issuing marijuans industry stock.

Morgan Paxhia

U.S. stocks continued to advance today as broad markets regained record highs. The S&P 500 posted a gain of 0.40% to 2,079.

The recent, relentless selling pressure in cannabis seems to have passed for now. Indices were mostly flat last week and are pretty quiet today as well. MJIC Marijuana Index and Benzinga 420 Marijuana Index declined by 0.56% and 1.82%, respectively.

Daily Positive: GW Pharmaceuticals (GWPH) was added to the NASDAQ Biotech Index this past Friday. We see this action as yet another qualifier of the movement’s staying power.

Daily Negative: Three pump and dump names we’ve previously mentioned have been hit hard with selling pressure again today: THCZ, NWPN, and NHLE. This action looks pretty textbook to us.

One of the benefits of being a public company is the access to low cost capital. Public companies have the ability to issue stock versus other methods such as borrowing money. However, issuing stock is another way of saying you are potentially diluting your existing shareholders, adding supply to the market, etc. If the market is not bullish on your plan or execution, the stock will suffer.

Unfortunately, we are seeing this scenario play out in Canada with Organigram (TSXV: OGI.V). Its ambitions to grow came at the cost of its existing investors as Organigram had to raise capital at a lower price than the last capital raise. In addition, it was only able to raise a fraction of their intended goal.

 

The discussion above is provided for informational purposes only and does not constitute an offer of, or solicitation for, any investment services or products offered by the author. The author is not making any investment recommendations and the opinions above do not constitute investment advice. Reference to above indices [and companies] is based on information provided by sources the author believes to be credible. Investing in the cannabis industry, as with other industries, presents certain risks including the risk of loss on an investment.

 

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