MedMen stock has sunk to a new low of just $0.18 today, just weeks after the departure of controversial CEO Adam Bierman and the release of dismal Q2 earnings. This disastrous performance has many investors and speculators wondering—is MedMen Enterprises (CSE:MMEN) (OTCQX:MMNFF) approaching the end of the line?
The troubled US cannabis firm has been in freefall for much of the last year following heavy speculation regarding its financial health, which eventually led to a vendor payment crisis earlier this year in which the company attempted to settle some of its outstanding bills with MedMen stock options. After a dubious Reddit Ask Me Anything session in which he ducked questions on the crisis at the company, co-founder and CEO Bierman announced his resignation at the end of January, although it has failed to launch any sort of resurgence in the share price.
The full extent of the cash crisis at MedMen Enterprises was laid bare at the end of February with the release of its second-quarter earnings. The company reported quarterly revenue (excluding recently sold Arizona stores) of US$44.1 million, an increase of 50% from a year earlier; however, its net loss widened to US$40.6 million from US$18.7 million.
As a result of those escalating losses and the rapidly falling value of MedMen stock, the company has no choice but to simplify its operations in order to survive. As a result, the firm will now shift its focus to retail and move away from the business of growing and producing cannabis, something which consumers have said was never their strong point. Recent weeks have seen the sale of production assets in areas such as Arizona and Illinois, where recreational sales totaled US$75 million in the first two months of legalization.
MedMen Stock Wiped Out
MedMen stock currently trades at just $0.18, down almost 96% from a peak of $4.50 just over a year ago. The company has clearly realized its strengths lie in retail, and the decision to ditch the struggling aspects of its business, as well as the toxicity from its controversial CEO, may well carve out a path to survival, and even profitability. However, the coronavirus outbreak has caused widespread panic in the stock market, and the economic impact remains unknown, yet may be vast. MedMen may be turning itself around, but the economy may have another say in that matter.
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