MedMen Stock Soars 90% in a Week: A Dead Cat Bounce?

MedMen stock

2019 has been a pretty tough time for the entire cannabis sector, and many of the biggest companies in the industry have seen their stock prices plunge to new lows from one week to the next. Canadian cannabis retailer MedMen Enterprises (CSE:MMEN) (OTCQX:MMNFF) suffered the same fate, but MedMen stock has made a remarkable turnaround after the company made an important announcement last week.

Another Cost-Cutting Announcement

The company announced that as part of its cost-cutting exercise, it was going to cut 20% more of corporate jobs at MedMen. This is a significant announcement, considering the fact that the company laid off as many as 190 employees less than a month ago.

While MedMen Enterprises did not provide an actual headcount of the number of employees who have been laid off, it did reveal that over the course of the past month or so, it has managed to reduce its employee strength at the corporate level by as much as 40%.

That is higher than the originally targeted 20%. MedMen added that the measure is going to save the company as much as $20 million annually.

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 The move resulted in a sustained rally in the stock, and over the course of the past week, MedMen stock has soared by as much as 90%.

Financial Crunch

While the company’s efforts to reduce its costs are admirable, it should be noted that MedMen Enterprises is currently going through an acute financial crunch. If it had not gotten $280 million in financing from Gotham Green Partners, then the company would have stopped being a functioning business.

The PharmaCann takeover, which could have proven to be a massive boost, fell through due to the cash troubles at MedMen. While the present rally in the stock might tempt many, analysts believe that it is still a risky bet considering the significant cash burn at MedMen.

Despite the recent rally, MedMen stock remains one of the worst performers in the cannabis industry, with a fall of 80% since the beginning of this year.

>> Read More MedMen News

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