Curaleaf stock is gaining momentum on Monday after core shareholders in Curaleaf Holdings (CSE:CURA) (OTCQX:CURLF) have reached an agreement to extend their lock-up expiry.
Short-Term Relief?
Curaleaf stock received a major boost today after the main shareholders in the company agreed to extend the lock-up agreement for their shares.
Core investors usually own a large portion of the shares in a company, and if they sell any of these shares, then that can have an adverse effect on the stock. For these investors to agree to keep their shares in a lock-up period (meaning they can't sell them) is a big vote of confidence in Curaleaf Holdings, so it's no surprise that Curaleaf stock rose by 2% today.
According to the terms of the new agreement, 15% of the shares that are eligible for sale can be released today. From then on, the investors will be allowed to offload 15% of their holding on the last day of each quarter. The last 10% of the shares in the investors’ possession will be released no later than March 31, 2021. Boris Jordan, the executive chairman of Curaleaf, spoke about the development:
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"The extension of the lock-up agreements by Curaleaf's core shareholders signals their ongoing support for the Company. We expect the new lock-up release schedule to reduce uncertainty regarding the release of currently locked-up shares.”
Curaleaf stock is up 2% at $8.20 on the CSE.
Curaleaf Holdings is one of the handfuls of vertically integrated cannabis companies that operate across multiple states. The company has set a sales target between $1 billion and $1.2 billion next year. While this might appear a tall order, there are two factors that might help the company in generating those impressive sales figures. First of all, Curaleaf has as many as 49 dispensaries across 12 states in the United States. In addition to that, it boasts of 13 processing facilities and 14 cultivation areas.
Moreover, very few companies in the US currently have those many operational dispensaries. Secondly, the company is expanding rapidly by virtue of expansions. Cura Partners has been an excellent acquisition so far. The acquisition of Grassroots could prove to be even more pivotal as it will expand Curaleaf's presence to as many as 19 states.
All the same, it's important to keep in mind that Curaleaf stock has fallen over 40% from its peak price in 2019.
Featured image: Canva
