MedMen stock is currently up 2.09% and trading for $2.44 USD on the US exchange. The iconic, up-market US cannabis retailer (who’s stores emulate Apple’s in design) has performed poorly on the stock market in 2019. But despite this, Wall Street remains bullish on MedMen Enterprises (CSE:MMEN) (OTCQX:MMNFF). What gives?
MedMen Stock in 2019
Giving it a consensus price target of $6.38 per share, as stated, Wall Street remains bullish on this cannabis play. Such a target represents a potential upswing of 161%—that’s pretty hefty.
This must be a head-scratcher for investors because MedMen stock has lost 16% of its value this year on the back of operational losses and an overall poor financial performance.
For example, in its most recent quarter, the company reported a net operating loss of $53.3 million; this news caused MedMen stock to, understandably, tank. But that’s the tip of a $178.4 million iceberg lost over the last nine months.
Will Sales Rescue MedMen Stock?
Although the company is burning through cash to operate its 86 retail licenses, the juice might be worth the squeeze in Wall Street’s eyes. Because what MedMen Enterprises has done incredibly well is build a recognizable and powerful brand.
It’s not just another marijuana shop. MedMen is offering customers “an experience” with its upmarket “Apple-esque” stores that follow a theme that is hip, upmarket, and trendy. This has worked so far as sales have been eye-wateringly strong—MedMen expects annual sales to top $1 billion within the next few years.
If it does this, it will be the largest US-based cannabis retailer in terms of annual revenues.
Add to this a presence in five states with more on the way, and a partnership with Cronos Group (NASDAQ:CRON) giving it presence in Canada.
If MedMen Enterprises can reduce its expenditure and simultaneously keep sales as high as they have been, then the company will likely be a winner. If it can reduce costs, then investors might even see a profit in the next two years.
But MedMen stock is still highly speculative. A lot rides on the company’s ability to cut its costs, and with further expansions on the way, that almost seems an impossible feat. Having said that, plenty of companies spend big at the start to earn big down-the-line. If MedMen sales remain high and its brand as appealing as it currently is, then for only $2.44 at present, the risk could be a wise choice.
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