MedMen stock does not come without its fair share of volatility—and the reasons are very real for that. But for all its cash-spending and executive ousting behavior, there is a longterm possibility for MedMen Enterprises (CSE:MMEN) (OTCQX:MMNFF) that investors shouldn’t overlook.
This “possibility” is a potential acquisition by a much larger, more established brand. Because MedMen is primed for the picking. In fact, it’s perfect buyout material.
The California-based dispensary giant is selling for penny stock prices at present. For $2.02 on the OTC, investors might be interested to try their hand. After all, there is a lot to like. This includes 13 retail stores in operation in California and a rising commercial footprint with soon-too-be over 86 retail licenses across the US.
All-in-all, MedMen Enterprises will become the second-largest US marijuana dispensary once its PharmaCann transaction closes next year. This puts it in a very nice position for a market that’s estimated to reach $44.8 billion in annual sales by 2024.
However, there are problems (of course, there are). Why else would shares be selling for such a meager price?
In short, the dispensary brand has been burning through cash and has faced serious turnover at head office. Mounting losses and problems with management are two sure-fire ways to keep investors at bay. Until it tackles this, it’s likely MedMen stock will remain lowly-priced.
However, the company is a prime target for an acquisition. An enterprise with bucket-loads of spare cash could sort out the mounting debt and replace management in one step. For its troubles, it would be privy to 86 retail outlets across the US and a popular and trendy brand making waves in the mecca of cannabis—California.
If a buy-out were to occur, it probably wouldn’t arrive until the US ends the federal prohibition on marijuana, and who knows when that might be. We could be talking years.
But on its own, and from its current stand-point, MedMen stock will likely take a long time to reach sustainable levels of profitability. Is an acquisition the only real hope for investors to turn a profit here?
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