Should you invest in Namaste stock? Namaste Technologies (TSXV:N) (OTCQB:NXTTF) has been a whirlwind of controversy at a time when its peers are establishing life-long loyalties from investors and customers alike. But at $0.76 CAD on the TSXV, might there be a bargain here?
Potentially, but don't be fooled; losing investor trust this early in a budding industry means one massive uphill battle for Namaste.
Can Namaste Stock Recover?
Namaste Technologies runs an online medical cannabis business (NamasteMD) and e-commerce platform selling cannabis-relative devices (vaporizers and the likes).
The business model was doing great things earlier in 2018—its NamasteMD website grew over 300%, and the company reported revenues of $1.65 million. Its platform wasn't just a website; it was a hub, with the capability of catering to any new legalized jurisdiction in the world. Operating online meant the potential of a global reach. This meant the potential of thousands of new medical cannabis users at its finger-tips.
But the company hit a roadblock shortly before recreational cannabis legalization kicked off in Canada. A Citron report spoke of fraud by the company's then-CEO Sean Dollinger. Once that news hit headlines, Namaste stock tanked, and the company has not recovered since.
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Recreational Normalization
Another problem Namaste Technologies has had to contend with is the normalization of recreational cannabis in everyday life. Because of this, the market is shifting away from "telemedicine applications" and the need for medical questioning.
This shows us something finite about the NamasteMD platform; once a user knows what suits and has all the information they need, is there much use for the platform?
Namaste Stock Struggles
The company is currently operating with an interim CEO as it struggles to steer the ship. Further, its quarterly results are delayed, and the most positive news investors can take away right now is that it is focusing on improving user experience on its websites.
Now, Namaste stock is selling for a low price, where eight months ago it was looking at uplisting to the NASDAQ exchange. How the mighty do fall.
But there is potential if you are willing to wait. The company has added a former PWC partner Kenneth Jones to its board of directors. Jones brings with him years of accounting experience, and this may offer one sigh of relief for investors because of those previous fraud allegations. Surely his addition is also a sign that the company is straightening its tie.
Until the company finds a strong and solid, trustworthy CEO, however, Namaste stock can't likely recover much. The company really needs to prove to investors it is actually turning things around, not simply putting a plaster over a gaping wound.
Featured Image: Canva
