MedMen stock continues to recover after the recent slump. Let’s analyze the key developments from MedMen Enterprises (CSE:MMEN) (OTCQX:MMNFF).
The majority of the cannabis stocks in the market have been beaten down for many months now, and due to the steep declines, some stocks may seem quite attractive. One company that might seem interesting at this point is MedMen Enterprises, which is a vertically integrated cannabis operator across multiple states in the United States. Moreover, the company has a considerable presence in lucrative markets like Florida and California, as well. However, there are other factors that should be considered by investors before they decide to put their money in MedMen stock.
On the surface, it might seem that MedMen’s presence in California is going to be its strongest feature and especially so considering the fact that recreational sales were legalized in the state from January 2018. However, things did not pan out as expected due to the higher taxes on marijuana, and legal sales in the state actually declined by $500 million last year. California is at the core of the company’s business, and in Q3 2019, the sales in California grew by only 5% from sales in the second quarter.
MedMen stock is up 6.50% at $1.49 CAD. The stock has gained 13% over the past three trading sessions.
There are other issues as well with regards to MedMen Enterprises. For starters, the company has been losing money consistently at a time when many of its rivals are trying to push their operating earnings. In fact, some of those rivals have pushed their operating earnings into the positive. In fiscal 2019 alone, the company produced operating losses of $178.4 million for the first nine months of the year, and that is something that should worry investors. The company is trying to expand and also build its base quickly. However, that is taking a toll on the bottom line in a big way.
Last but not least, the company is struggling to raise capital as well build its business, and much of that is due to the fact that marijuana is classed as a Schedule I drug. MedMen also failed to acquire PharmaCann recently, and that has been another blow to the company.
MedMen stock is down over 65% so far this year.
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