A SPAC gets ready for its acquisition, a NICI favorite, and a newbie earn their spots on our cannabis watchlist…
As we gear up for the doldrums of summer to come to an end, I wanted to share the cannabis storylines, trends, and news I’m currently watching unfold so you can make the most of the end of the season – and know exactly who you should be paying attention to as the markets pick back up in the fall.
There were three cannabis companies in particular that popped up on my radar this week.
Here are the names you should be watching and why…
1. Merida Merger
Cannabis special-purpose acquisition company (SPAC) Merida Merger Corp. I (Nasdaq: MCMJ) announced this week that it has found its acquisition target: the popular online cannabis marketplace, Leafly.
Once the transaction is complete, the combined company will exist under the Leafly name and will be listed on the Nasdaq under the stock ticker “LFLY.”
As a reminder, SPACs are essentially blank check companies that raise money to purchase a company (or several). You can invest in a SPAC like you would any other publicly traded stock, though investors will not initially know what the company will be.
These investment vehicles have become increasingly popular as a “backdoor” way for cannabis companies to go public and skip straight to the front of the line for success by purchasing existing companies and their assets instead of building a business from scratch.
With that in mind, Merida deserves a spot at the top of your watchlist with its pending Leafly acquisition. Here’s why.
Before they finalize a deal with the company they’ll ultimately take public, SPACs typically trade around $10. That’s because, at that initial stage, investors don’t know what company the SPAC will choose, so $10 provides a baseline.
Once a transaction occurs, if investors are happy with the company the SPAC has chosen to acquire, its stock price typically goes up. We saw this happen with Silver Spike Acquisition Corp. earlier this year after its acquisition of Weedmaps, which ultimately became WM Technology Inc. (Nasdaq: MAPS).
In the months following Silver Spike’s acquisition announcement on December 10, its shares shot up from $10 to nearly $30 in February:
Source: National Institute for Cannabis Investors
With Merida, it’s worth paying attention to see if something similar happens, especially considering the fact that its acquisition target, Leafly, is a competitor of Weedmaps – and an arguably better one at that.
2. Planet 13
If I’ve learned anything about our National Institute for Cannabis Investors (NICI) members over these past few years, it’s that Planet 13 Holdings Inc. (OTC: PLNHF) is a wildly popular favorite – which means you’ll love this latest news.
Last Thursday, after winning an invaluable license lottery in Illinois, Planet 13 announced that it had found the ultimate destination for its next iconic SuperStore: Chicago.
That massive win comes on the tail of Illinois’ best month yet for legal cannabis sales, with $128 million worth of products sold in July.
This will be Planet 13’s third SuperStore location after its flagship Las Vegas SuperStore and its newest location in Orange County, California (“P13 OC”), which together brought in $11.9 million in sales last month – setting a new record for the company.
NICI Membership subscribers can read all about why Chicago is an ideal location for Planet 13 right here.
PLNHF shares have rebounded modestly in the days since that announcement. After opening at $5.20 on the day-of (August 5), the stock price saw a nice 10% boost to a $5.73 high on August 6. As of this writing, shares are trading around $5.58.
While there’s no denying that cannabis stock prices as a whole have taken a dip in 2021, if you zoom out and look at the bigger picture, you’ll see that Planet 13 shares are up over 100% from where they were trading around $2.77 this same time last year:
Source: National Institute for Cannabis Investors
We’ll keep watching Planet 13 as plans for its Chicago SuperStore develop and sales at its Orange County SuperStore continue to pick up.
3. Ascend Wellness
Here’s a new name to add to your watchlist: Ascend Wellness Holdings Inc. (OTC: AAWH).
Ascend is a multistate operator (MSO) that has managed to stay relatively under the radar since going public in May through an IPO, but don’t be fooled.
This company managed to grow revenues 12X from $12 million in 2019 to nearly $144 million in 2020. Its debut Q1 2021 earnings numbers were more than impressive, revealing that it almost tripled its quarterly revenue year-over-year (YoY) to $66.1 million.
And based on the Q2 2021 earnings results it announced yesterday, it looks like that was only the beginning for this up-and-comer.
Ascend’s second-quarter revenue came in at $97.5 million, up 28.5% from the previous quarter and up 236% from the same time last year.
And just halfway through the year, Ascend’s revenues have already surpassed what it brought in for the entire year of 2020.
It might be fresh on the scene, but this newbie has proven that it’s worth paying attention to.
Members of my Cannabis Inner Circle can get my full take on Ascend in this exclusive Insider Video Breakdown.
To your investing success,
Executive Director, National Institute for Cannabis Investors
Up Next: 10 Stocks to Buy Every Summer
Every summer, you’ll want to target these 10 stocks like clockwork. Because for nine of the last ten years, they’ve generated 50%, 75%, even up to 100% gains in a matter of weeks. Go here now to see which ones made the cut.
5 responses to “NICI’s End of Summer Cannabis Stock Watchlist: Merida Merger Corp. I, Planet 13, Ascend Wellness”
August 11 2021