From January highs of $1.65, Namaste stock has declined roughly 70% year-to-date. It's not exactly a pretty picture for investors. Currently selling for $0.48 CAD, the question is now, has cannabis e-commerce company Namaste Technologies (TSXV:N) (OTCQB:NXTTF) bottomed out?
Namaste Stock: Have Shares Bottomed Out?
While the entire market was due for a correction after being grossly overvalued in October 2018, Namaste stock has, quite simply, been decimated in the last year.
After the euphoria surrounding cannabis legalization in Canada waned, cannabis companies were left exposed. And after skyrocketing to all-time highs, there was nowhere left to go but down.
During this ambiguous period after legalization, Namaste stock was not only hit by a market-wide downtrend, but it showed plenty of its own teething problems. At a time when investors expected the industry to grow, Namaste Technologies showed declining revenues. In fact, it reported a significant 18.5% year-over-year drop in company sales during the first quarter of 2019.
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Then There was Controversy
In the first half of 2019, the company was still dealing with a class-action suit filed in October. It fired its then CEO and around the same time lost its auditor PricewaterhouseCoopers, meaning it was forced to file its Q1 and fiscal 2018 financial reports late. All the drama helped to further Namaste stock's downward spiral.
So where to next? At its current price, Namaste Technologies is cheap. Of course, if shares continue to decline, then there's no value in it being cheap. However, there are potentials on the horizon.
Namaste might well experience revenue growth in the coming quarters. Not only is the global cannabis market expected to grow significantly, but Namaste also has two clever acquisitions that may return.
It acquired a 49% stake in Pineapple Express Delivery, a medical cannabis delivery company, and further, it is looking to enter the edible cannabis market with a 49% stake in chocolate maker Choklat. Namaste Technologies is also a unique play as it focused on the consumer retail segment. If it can gain significant market share here and improve working capital, then it could very easily see a turnaround.
What are your thoughts about Namaste stock? Is it still too risky?
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