MedMen Stock is Risky, Volatile, Unprofitable: Why Should You Play It?

MedMen stock

MedMen stock is bucking the trend and is up 4.11% at present. For much of 2019, MedMen Enterprises (CSE:MMEN) (OTCQX:MMNFF) has remained one of cannabis’s regular “losers” on Wall Street; shares of the US’s most aggressive cannabis retailer have lost 32% year-to-date.

Shares are selling for $3.04 CAD on the CSE at present.

MedMen Stock: Light Ahead?

June saw a brief respite from the slump and shares surged 19% across the month. In fact, the gains made MedMen stock one of the month’s strongest plays. But come July, prices had corrected once again.

The optimism was fueled by the company’s expanding dispensary count along with pro-cannabis legalization in the US state of Illinois.

California Mecca and Now Illinois

In early June, the company announced the opening of its 15th Californian store.

For those that don’t know, California is the mecca for US cannabis. The state is so important for retailers because by 2024, according to Arcview Market Research and BDS Analytics, California is expected to account for nearly a quarter of the US’s $30 billion in licensed-store marijuana sales.

Capitalize off Cannabis
Sign up now to start receiving our investing insights for FREE!

 

With legal marijuana sales growing, MedMen Enterprises is in a lucrative position with its now 15 stores.

At the same time, recreational cannabis was made officially legal in the state of Illinois. MedMen stock received a significant bump from this good news because the company is in the middle of acquiring PharmaCann. It just so happens that the latter has already established a massive presence in this state.

Now, with sales for adult-use marijuana beginning here on January 1, 2020, MedMen can benefit from the potential of a whole new market.

>> Aurora Stock Jumps on Two New Licences from Health Canada

Big Spender

Investors have shown their concern regarding MedMen burning through cash in order to expand operations. It’s the main reason MedMen stock has remained on a downward trend for much of 2019.

Recently, without yet turning a profit it reached out to private investment firm Gotham Green for funding.

Only one week ago Gotham “strengthened its commitment” to MedMen Enterprises and amended its deal with the company. It made things a little easier by giving it an additional $30 million in funding and removing price-based obstacles to an existing $250 million commitment.

The Takeaway

Although the company has lost money hand-over-fist, management is still confident in its “march toward profitability.” Investors will be betting on the management’s “ability to turn revenue into profits and cash flow.”

If you believe you have to “spend money to make money,” then MedMen stock might sit well with you—just don’t expect any great rewards soon. On the other hand, if you believe that over-spending is a sure sign of mismanaging, then stay far away from MedMen stock; at least until the company evens out its balance sheet.

What are your thoughts on this?

>> Read More MedMen News

Featured Image: Canva