g Marijuana `Panic Selling' Spurs Canadian Pot Stocks Meltdo
- Thread starter gb123
- Start date
When friends learn that Oliver Babin, a 21-year-old business student, calls the shots on an $8-million stock portfolio, they usually have one question for him.
"Everyone wants to know what I think of marijuana stocks," said the fourth-year University of New Brunswick student, who is part of a nine-person team that runs an investment fund as part of their studies. Like many investors, some of Mr. Babin's buddies are caught up in pot-stock fever. Several of them, including those who occasionally enjoy a toke or two, made their first forays into the equity market by jumping into stocks such as Emerald Health Therapeutics Inc. last November, when its shares traded around $1.50; just three months later, the B.C.-based bud producer hit $9.
At that price, Emerald Health had a stock market value of more than $1-billion; it was valued at $657-million on Friday after cannabis stocks sold off sharply this week. That is quite something for a business that brings in less money than a well-run convenience store. The company's financial statements for the first nine months of last year show a mere $658,000 in revenue and a $4.8-million loss. Of course, that's not terribly surprising in an industry that recently saw a hot takeover battle for a company, Newstrike Resources Ltd., that has yet to sell a single gram. At one point last month, Newstrike enjoyed a market capitalization of more than $1.1-billion (it's now $390-million).
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It has all the hallmarks of a mania, a bubble that is perhaps in the middle of bursting after marijuana company shares melted down this week. That's why, even on a cannabis-friendly university campus, Mr. Babin and his colleagues at UNB are just saying no to marijuana stocks. The student-run fund has never owned any pot plays and has no plans to do so. Mr. Babin said "the price on these cannabis companies makes no sense. It's market trading on momentum, not value."
Oliver Babin.JAMES WEST/THE GLOBE AND MAIL
Fuelled by the prospect of federal legalization of recreational marijuana in July, Canadian cannabis stocks have had an extraordinary run. A sector that barely existed three years ago is now home to dozens of public companies with a combined market capitalization of almost $30-billion. Those numbers are partly a reflection of growing interest from individual investors and new exchange-traded funds that are pouring cash into cannabis, even as pension funds and many other institutional investors regard the sector as too speculative.
Small fortunes are being made. Investment bank Canaccord Genuity Group Inc., a major underwriter of marijuana stocks, runs an index of publicly traded cannabis producers. It was up 277 per cent in 2017 – versus a thin 6 per cent gain in the S&P/TSX benchmark.
And an industry is being created. Across Canada, abandoned factories and warehouses are being converted in grow-ops. Greenhouses once filled with flowers or tomatoes are now pot plantations.
Celebrities are getting in on the action. Rapper Snoop Dogg endorses products from Canopy Growth Corp., the country's largest producer, while members of rock band the Tragically Hip have turned a $21-million paper profit on their stake in Newstrike after crafting a deal to develop brands named after their hit songs.
But the hype no longer matches reality. The simple principle of supply and demand is going to knock the stuffing out of cannabis stocks – a process that may have begun this week, with cannabis stocks down 17 per cent. Legalizing marijuana marks a cultural shift in Canada, but it's still a commodity that is subject to the laws of economics.
"None of these companies invented marijuana. Canada is just changing the supply chain for the industry," Mr. Babin said. Demonstrating that he has paid attention in economics classes, the native of Rimouski, Que., said: "The cannabis market is in its early stages, with low barriers to entry and numerous competitors who haven't shown they have a sustainable competitive advantage."
STORY CONTINUES BELOW ADVERTISEMENT
While companies such as Canopy Growth have been public since 2014, the market has been hitting new highs since last fall. As recently as last November, a study by Echelon Wealth Partners Inc. revealed that Canada's publicly listed cannabis companies were trading at a multiple of approximately nine times their forecast 2019 earnings before interest, taxes, depreciation and amortization (EBITDA). Then, as marijuana stock prices soared, the sector began to trade at more than 22 times its forecast 2019 EBITDA. The recent selloff – part of a broader stock market downturn that saw companies perceived as higher-risk swoon – has brought that multiple down. But only to 14 times.
Pot stock trading multiples
Canadian sector's valuation relative to consensus forecast 2019 earnings
4681012141618202224xFeb.2017Apr.JuneAug.Oct.Dec.Feb.201812.0
THE GLOBE AND MAIL, SOURCE: ECHELON WEALTH PARTNERS / NOTE: EARNINGS ARE BEFORE INTEREST TAXES, DEPRECIATION AND AMORTIZATION
DATA
SHARE
×
Date Valuation
2017-01-24 12.0
2017-01-30 11.6
2017-02-06 11.8
2017-02-13 10.9
2017-02-20 11.9
2017-02-27 11.6
2017-03-06 11.5
2017-03-13 10.3
2017-03-20 9.7
2017-03-27 10.3
2017-04-03 9.4
2017-04-10 10.7
2017-04-13 10.8
2017-04-24 9.9
2017-05-02 9.0
2017-05-08 8.6
2017-05-15 8.2
2017-05-19 8.6
2017-05-29 8.9
2017-06-05 6.9
2017-06-12 7.0
2017-06-19 6.6
2017-06-26 6.7
2017-06-30 6.6
2017-07-07 6.4
2017-07-14 7.0
2017-07-21 7.2
2017-07-28 7.6
2017-08-04 7.4
2017-08-11 7.3
2017-08-18 7.5
2017-08-25 7.0
2017-09-01 7.4
2017-09-08 7.3
2017-09-15 7.6
2017-09-22 7.9
2017-09-29 9.0
2017-10-06 9.7
2017-10-13 8.9
2017-10-20 8.6
2017-10-27 8.8
2017-11-03 10.0
2017-11-10 11.1
2017-11-17 12.6
2017-11-24 13.9
2017-12-01 14.0
2017-12-08 14.9
2017-12-15 14.9
2017-12-22 15.5
2017-12-29 19.8
2018-01-05 22.7
2018-01-12 17.9
2018-01-19 20.4
2018-01-26 20.9
2018-02-02 14.0
POT STOCK TRADING MULTIPLES
Can the marijuana industry get large enough – and profitable enough – to justify that kind of valuation?
Here's how the numbers shake out.
First, let's look at demand for cannabis: Statistics Canada published a study in January that estimated Canadians spent $5.7-billion on marijuana in 2017, when the product was still illegal. The agency figured 4.7 million citizens smoked, vaped or baked hash brownies, consuming 773,000 kilograms of marijuana. Obviously, most of the supply came from black-market sources. Statscan pegs the average price at $7.43 a gram.
Average national cannabis price
Per gram
Medical purposes
Non-medical purposes
7.007.508.008.509.009.50$10.0020102011201220132014201520169.069.06
THE GLOBE AND MAIL, SOURCE: STATSCAN
DATA
SHARE
×
Characteristics Medical purposes Non-medical purposes
2010-01-01 9.06 9.06
2011-01-01 9.14 9.14
2012-01-01 9.3 9.3
2013-01-01 9.5 9.4
2014-01-01 9.27 9.05
2015-01-01 8.92 8.5
2016-01-01 8.69 8.09
2017-01-01 8.18 7.43
"Everyone wants to know what I think of marijuana stocks," said the fourth-year University of New Brunswick student, who is part of a nine-person team that runs an investment fund as part of their studies. Like many investors, some of Mr. Babin's buddies are caught up in pot-stock fever. Several of them, including those who occasionally enjoy a toke or two, made their first forays into the equity market by jumping into stocks such as Emerald Health Therapeutics Inc. last November, when its shares traded around $1.50; just three months later, the B.C.-based bud producer hit $9.
At that price, Emerald Health had a stock market value of more than $1-billion; it was valued at $657-million on Friday after cannabis stocks sold off sharply this week. That is quite something for a business that brings in less money than a well-run convenience store. The company's financial statements for the first nine months of last year show a mere $658,000 in revenue and a $4.8-million loss. Of course, that's not terribly surprising in an industry that recently saw a hot takeover battle for a company, Newstrike Resources Ltd., that has yet to sell a single gram. At one point last month, Newstrike enjoyed a market capitalization of more than $1.1-billion (it's now $390-million).
STORY CONTINUES BELOW ADVERTISEMENT
It has all the hallmarks of a mania, a bubble that is perhaps in the middle of bursting after marijuana company shares melted down this week. That's why, even on a cannabis-friendly university campus, Mr. Babin and his colleagues at UNB are just saying no to marijuana stocks. The student-run fund has never owned any pot plays and has no plans to do so. Mr. Babin said "the price on these cannabis companies makes no sense. It's market trading on momentum, not value."
Oliver Babin.JAMES WEST/THE GLOBE AND MAIL
Fuelled by the prospect of federal legalization of recreational marijuana in July, Canadian cannabis stocks have had an extraordinary run. A sector that barely existed three years ago is now home to dozens of public companies with a combined market capitalization of almost $30-billion. Those numbers are partly a reflection of growing interest from individual investors and new exchange-traded funds that are pouring cash into cannabis, even as pension funds and many other institutional investors regard the sector as too speculative.
Small fortunes are being made. Investment bank Canaccord Genuity Group Inc., a major underwriter of marijuana stocks, runs an index of publicly traded cannabis producers. It was up 277 per cent in 2017 – versus a thin 6 per cent gain in the S&P/TSX benchmark.
And an industry is being created. Across Canada, abandoned factories and warehouses are being converted in grow-ops. Greenhouses once filled with flowers or tomatoes are now pot plantations.
Celebrities are getting in on the action. Rapper Snoop Dogg endorses products from Canopy Growth Corp., the country's largest producer, while members of rock band the Tragically Hip have turned a $21-million paper profit on their stake in Newstrike after crafting a deal to develop brands named after their hit songs.
But the hype no longer matches reality. The simple principle of supply and demand is going to knock the stuffing out of cannabis stocks – a process that may have begun this week, with cannabis stocks down 17 per cent. Legalizing marijuana marks a cultural shift in Canada, but it's still a commodity that is subject to the laws of economics.
"None of these companies invented marijuana. Canada is just changing the supply chain for the industry," Mr. Babin said. Demonstrating that he has paid attention in economics classes, the native of Rimouski, Que., said: "The cannabis market is in its early stages, with low barriers to entry and numerous competitors who haven't shown they have a sustainable competitive advantage."
STORY CONTINUES BELOW ADVERTISEMENT
While companies such as Canopy Growth have been public since 2014, the market has been hitting new highs since last fall. As recently as last November, a study by Echelon Wealth Partners Inc. revealed that Canada's publicly listed cannabis companies were trading at a multiple of approximately nine times their forecast 2019 earnings before interest, taxes, depreciation and amortization (EBITDA). Then, as marijuana stock prices soared, the sector began to trade at more than 22 times its forecast 2019 EBITDA. The recent selloff – part of a broader stock market downturn that saw companies perceived as higher-risk swoon – has brought that multiple down. But only to 14 times.
Pot stock trading multiples
Canadian sector's valuation relative to consensus forecast 2019 earnings
4681012141618202224xFeb.2017Apr.JuneAug.Oct.Dec.Feb.201812.0
THE GLOBE AND MAIL, SOURCE: ECHELON WEALTH PARTNERS / NOTE: EARNINGS ARE BEFORE INTEREST TAXES, DEPRECIATION AND AMORTIZATION
DATA
SHARE
×
Date Valuation
2017-01-24 12.0
2017-01-30 11.6
2017-02-06 11.8
2017-02-13 10.9
2017-02-20 11.9
2017-02-27 11.6
2017-03-06 11.5
2017-03-13 10.3
2017-03-20 9.7
2017-03-27 10.3
2017-04-03 9.4
2017-04-10 10.7
2017-04-13 10.8
2017-04-24 9.9
2017-05-02 9.0
2017-05-08 8.6
2017-05-15 8.2
2017-05-19 8.6
2017-05-29 8.9
2017-06-05 6.9
2017-06-12 7.0
2017-06-19 6.6
2017-06-26 6.7
2017-06-30 6.6
2017-07-07 6.4
2017-07-14 7.0
2017-07-21 7.2
2017-07-28 7.6
2017-08-04 7.4
2017-08-11 7.3
2017-08-18 7.5
2017-08-25 7.0
2017-09-01 7.4
2017-09-08 7.3
2017-09-15 7.6
2017-09-22 7.9
2017-09-29 9.0
2017-10-06 9.7
2017-10-13 8.9
2017-10-20 8.6
2017-10-27 8.8
2017-11-03 10.0
2017-11-10 11.1
2017-11-17 12.6
2017-11-24 13.9
2017-12-01 14.0
2017-12-08 14.9
2017-12-15 14.9
2017-12-22 15.5
2017-12-29 19.8
2018-01-05 22.7
2018-01-12 17.9
2018-01-19 20.4
2018-01-26 20.9
2018-02-02 14.0
POT STOCK TRADING MULTIPLES
Can the marijuana industry get large enough – and profitable enough – to justify that kind of valuation?
Here's how the numbers shake out.
First, let's look at demand for cannabis: Statistics Canada published a study in January that estimated Canadians spent $5.7-billion on marijuana in 2017, when the product was still illegal. The agency figured 4.7 million citizens smoked, vaped or baked hash brownies, consuming 773,000 kilograms of marijuana. Obviously, most of the supply came from black-market sources. Statscan pegs the average price at $7.43 a gram.
Average national cannabis price
Per gram
Medical purposes
Non-medical purposes
7.007.508.008.509.009.50$10.0020102011201220132014201520169.069.06
THE GLOBE AND MAIL, SOURCE: STATSCAN
DATA
SHARE
×
Characteristics Medical purposes Non-medical purposes
2010-01-01 9.06 9.06
2011-01-01 9.14 9.14
2012-01-01 9.3 9.3
2013-01-01 9.5 9.4
2014-01-01 9.27 9.05
2015-01-01 8.92 8.5
2016-01-01 8.69 8.09
2017-01-01 8.18 7.43
Average daily trading volume in January
In millions of shares, for select companies
CIBCScotiabankTransCanadaRoyal BankSuncorEnbridgeTD BankManulife FinancialAphriaCanopy GrowthAurora Cannabis1.83.13.54.44.64.65.25.98.811.738.31.837886
THE GLOBE AND MAIL, SOURCE: BLOOMBERG / NOTE: TRADING ON CANADIAN MARKETS
DATA
SHARE
×
Company Volume
Aurora Cannabis 38.25492282
Canopy Growth 11.68891909
Aphria 8.809054545
Manulife Financial 5.930409182
TD Bank 5.227166727
Enbridge 4.623484136
Suncor 4.605717591
Royal Bank 4.357566
TransCanada 3.517539955
Scotiabank 3.127526636
CIBC 1.837886
AVERAGE DAILY TRADING VOLUME IN JANUARY
Marijuana producers are all too aware that they need to do more than run grow-ops if they want to keep the stock market party going. Canaccord Genuity ran its second annual cannabis conference in Vancouver in late January, staging pitches from 28 companies – up from 11 the year before. More than 600 investors heard variations on the same theme: Companies planned to preserve or enhance their profit margins by moving into products such as cannabis oils and extracts, by establishing brands and by exporting to the U.S. and Europe. In a report, Canaccord Genuity analyst Neil Maruoka summed up the emphasis on adding value by writing: "This will be important as producers look to maintain or expand margins in the face of potential commoditization of cannabis."
Institutional investors are targeting companies that service the cannabis industry with proprietary technology as the best way to play the sector. Deloitte estimates this ancillary market will generate annual revenues of more than $4-billion. Steven Palmer, CEO of small cap fund manager AlphaNorth Asset Management, has met with executives from some 30 cannabis-related companies. He ended up investing in a handful: One extracts oils, another makes marijuana beverages, and he has a stake in Evio Inc., which tests cannabis for pesticides.
"I have no investments in the growers. Every company has its spin, like proprietary strains or low-cost greenhouses. But funded capacity for the industry far exceeds demand," Mr. Palmer said. "I'm not convinced there will be an export market. I expect other countries are going to want to develop their own domestic industries."
The marijuana business is going through a cycle that's no different than what has played out in any emerging consumer product industry. Think of the history around cars or beer: There's a flood of startups when the sector gets rolling, then consolidation around a handful of the strongest players and a few small high-end brands.
At Brock University in St. Catharines, Ont., the student-run investment club is trying to pick one of those winning cannabis companies.
"We know the marijuana stocks are very speculative, but one of our members made a case for buying a well-run company that's likely to emerge as a market leader," said Ishan Patel, president of the Brock Finance and Investment Group and a fourth-year student at the Goodman School of Business. The club, which invests $20,000 of its own money and has 19 core members, held a vote Thursday on taking a stake in Aphria Inc., its first cannabis investment. The student who pitched the Leamington, Ont.-based company highlighted the fact that Aphria is conservatively financed – it presells the marijuana it grows – and has a proven ability to acquire rivals.
As the students prepared to vote, Aphria's stock price dropped 14 per cent on news the company is selling its U.S. operations to comply with still-fuzzy regulations in that country. Late Thursday, the Brock group voted unanimously in favour of buying 10 Aphria shares at $16 each – they are still students, it's not a bet-the-house investment. On Friday, Aphria dropped another 10 per cent, closing at $13.88. The students are prepared for a bumpy ride and set a $37 target price. Mr. Patel said: "We believe there's enormous growth potential. But the sector is still hugely speculative. We know we have to be careful."
In millions of shares, for select companies
CIBCScotiabankTransCanadaRoyal BankSuncorEnbridgeTD BankManulife FinancialAphriaCanopy GrowthAurora Cannabis1.83.13.54.44.64.65.25.98.811.738.31.837886
THE GLOBE AND MAIL, SOURCE: BLOOMBERG / NOTE: TRADING ON CANADIAN MARKETS
DATA
SHARE
×
Company Volume
Aurora Cannabis 38.25492282
Canopy Growth 11.68891909
Aphria 8.809054545
Manulife Financial 5.930409182
TD Bank 5.227166727
Enbridge 4.623484136
Suncor 4.605717591
Royal Bank 4.357566
TransCanada 3.517539955
Scotiabank 3.127526636
CIBC 1.837886
AVERAGE DAILY TRADING VOLUME IN JANUARY
Marijuana producers are all too aware that they need to do more than run grow-ops if they want to keep the stock market party going. Canaccord Genuity ran its second annual cannabis conference in Vancouver in late January, staging pitches from 28 companies – up from 11 the year before. More than 600 investors heard variations on the same theme: Companies planned to preserve or enhance their profit margins by moving into products such as cannabis oils and extracts, by establishing brands and by exporting to the U.S. and Europe. In a report, Canaccord Genuity analyst Neil Maruoka summed up the emphasis on adding value by writing: "This will be important as producers look to maintain or expand margins in the face of potential commoditization of cannabis."
Institutional investors are targeting companies that service the cannabis industry with proprietary technology as the best way to play the sector. Deloitte estimates this ancillary market will generate annual revenues of more than $4-billion. Steven Palmer, CEO of small cap fund manager AlphaNorth Asset Management, has met with executives from some 30 cannabis-related companies. He ended up investing in a handful: One extracts oils, another makes marijuana beverages, and he has a stake in Evio Inc., which tests cannabis for pesticides.
"I have no investments in the growers. Every company has its spin, like proprietary strains or low-cost greenhouses. But funded capacity for the industry far exceeds demand," Mr. Palmer said. "I'm not convinced there will be an export market. I expect other countries are going to want to develop their own domestic industries."
The marijuana business is going through a cycle that's no different than what has played out in any emerging consumer product industry. Think of the history around cars or beer: There's a flood of startups when the sector gets rolling, then consolidation around a handful of the strongest players and a few small high-end brands.
At Brock University in St. Catharines, Ont., the student-run investment club is trying to pick one of those winning cannabis companies.
"We know the marijuana stocks are very speculative, but one of our members made a case for buying a well-run company that's likely to emerge as a market leader," said Ishan Patel, president of the Brock Finance and Investment Group and a fourth-year student at the Goodman School of Business. The club, which invests $20,000 of its own money and has 19 core members, held a vote Thursday on taking a stake in Aphria Inc., its first cannabis investment. The student who pitched the Leamington, Ont.-based company highlighted the fact that Aphria is conservatively financed – it presells the marijuana it grows – and has a proven ability to acquire rivals.
As the students prepared to vote, Aphria's stock price dropped 14 per cent on news the company is selling its U.S. operations to comply with still-fuzzy regulations in that country. Late Thursday, the Brock group voted unanimously in favour of buying 10 Aphria shares at $16 each – they are still students, it's not a bet-the-house investment. On Friday, Aphria dropped another 10 per cent, closing at $13.88. The students are prepared for a bumpy ride and set a $37 target price. Mr. Patel said: "We believe there's enormous growth potential. But the sector is still hugely speculative. We know we have to be careful."
WHATFG
Well-Known Member
....hahahaha....their nice shiny new buildings are just grow ops...
torontomeds
Well-Known Member
Oh chicken little the sky is falling,lol. thats what you all sound like. This is a blip. Wait until Nov 2018.
Lightgreen2k
Well-Known Member
How do you feel this will all go.When friends learn that Oliver Babin, a 21-year-old business student, calls the shots on an $8-million stock portfolio, they usually have one question for him.
"Everyone wants to know what I think of marijuana stocks," said the fourth-year University of New Brunswick student, who is part of a nine-person team that runs an investment fund as part of their studies. Like many investors, some of Mr. Babin's buddies are caught up in pot-stock fever. Several of them, including those who occasionally enjoy a toke or two, made their first forays into the equity market by jumping into stocks such as Emerald Health Therapeutics Inc. last November, when its shares traded around $1.50; just three months later, the B.C.-based bud producer hit $9.
At that price, Emerald Health had a stock market value of more than $1-billion; it was valued at $657-million on Friday after cannabis stocks sold off sharply this week. That is quite something for a business that brings in less money than a well-run convenience store. The company's financial statements for the first nine months of last year show a mere $658,000 in revenue and a $4.8-million loss. Of course, that's not terribly surprising in an industry that recently saw a hot takeover battle for a company, Newstrike Resources Ltd., that has yet to sell a single gram. At one point last month, Newstrike enjoyed a market capitalization of more than $1.1-billion (it's now $390-million).
STORY CONTINUES BELOW ADVERTISEMENT
It has all the hallmarks of a mania, a bubble that is perhaps in the middle of bursting after marijuana company shares melted down this week. That's why, even on a cannabis-friendly university campus, Mr. Babin and his colleagues at UNB are just saying no to marijuana stocks. The student-run fund has never owned any pot plays and has no plans to do so. Mr. Babin said "the price on these cannabis companies makes no sense. It's market trading on momentum, not value."
Oliver Babin.JAMES WEST/THE GLOBE AND MAIL
Fuelled by the prospect of federal legalization of recreational marijuana in July, Canadian cannabis stocks have had an extraordinary run. A sector that barely existed three years ago is now home to dozens of public companies with a combined market capitalization of almost $30-billion. Those numbers are partly a reflection of growing interest from individual investors and new exchange-traded funds that are pouring cash into cannabis, even as pension funds and many other institutional investors regard the sector as too speculative.
Small fortunes are being made. Investment bank Canaccord Genuity Group Inc., a major underwriter of marijuana stocks, runs an index of publicly traded cannabis producers. It was up 277 per cent in 2017 – versus a thin 6 per cent gain in the S&P/TSX benchmark.
And an industry is being created. Across Canada, abandoned factories and warehouses are being converted in grow-ops. Greenhouses once filled with flowers or tomatoes are now pot plantations.
Celebrities are getting in on the action. Rapper Snoop Dogg endorses products from Canopy Growth Corp., the country's largest producer, while members of rock band the Tragically Hip have turned a $21-million paper profit on their stake in Newstrike after crafting a deal to develop brands named after their hit songs.
But the hype no longer matches reality. The simple principle of supply and demand is going to knock the stuffing out of cannabis stocks – a process that may have begun this week, with cannabis stocks down 17 per cent. Legalizing marijuana marks a cultural shift in Canada, but it's still a commodity that is subject to the laws of economics.
"None of these companies invented marijuana. Canada is just changing the supply chain for the industry," Mr. Babin said. Demonstrating that he has paid attention in economics classes, the native of Rimouski, Que., said: "The cannabis market is in its early stages, with low barriers to entry and numerous competitors who haven't shown they have a sustainable competitive advantage."
STORY CONTINUES BELOW ADVERTISEMENT
While companies such as Canopy Growth have been public since 2014, the market has been hitting new highs since last fall. As recently as last November, a study by Echelon Wealth Partners Inc. revealed that Canada's publicly listed cannabis companies were trading at a multiple of approximately nine times their forecast 2019 earnings before interest, taxes, depreciation and amortization (EBITDA). Then, as marijuana stock prices soared, the sector began to trade at more than 22 times its forecast 2019 EBITDA. The recent selloff – part of a broader stock market downturn that saw companies perceived as higher-risk swoon – has brought that multiple down. But only to 14 times.
Pot stock trading multiples
Canadian sector's valuation relative to consensus forecast 2019 earnings
4681012141618202224xFeb.2017Apr.JuneAug.Oct.Dec.Feb.201812.0
THE GLOBE AND MAIL, SOURCE: ECHELON WEALTH PARTNERS / NOTE: EARNINGS ARE BEFORE INTEREST TAXES, DEPRECIATION AND AMORTIZATION
DATA
SHARE
×
Date Valuation
2017-01-24 12.0
2017-01-30 11.6
2017-02-06 11.8
2017-02-13 10.9
2017-02-20 11.9
2017-02-27 11.6
2017-03-06 11.5
2017-03-13 10.3
2017-03-20 9.7
2017-03-27 10.3
2017-04-03 9.4
2017-04-10 10.7
2017-04-13 10.8
2017-04-24 9.9
2017-05-02 9.0
2017-05-08 8.6
2017-05-15 8.2
2017-05-19 8.6
2017-05-29 8.9
2017-06-05 6.9
2017-06-12 7.0
2017-06-19 6.6
2017-06-26 6.7
2017-06-30 6.6
2017-07-07 6.4
2017-07-14 7.0
2017-07-21 7.2
2017-07-28 7.6
2017-08-04 7.4
2017-08-11 7.3
2017-08-18 7.5
2017-08-25 7.0
2017-09-01 7.4
2017-09-08 7.3
2017-09-15 7.6
2017-09-22 7.9
2017-09-29 9.0
2017-10-06 9.7
2017-10-13 8.9
2017-10-20 8.6
2017-10-27 8.8
2017-11-03 10.0
2017-11-10 11.1
2017-11-17 12.6
2017-11-24 13.9
2017-12-01 14.0
2017-12-08 14.9
2017-12-15 14.9
2017-12-22 15.5
2017-12-29 19.8
2018-01-05 22.7
2018-01-12 17.9
2018-01-19 20.4
2018-01-26 20.9
2018-02-02 14.0
POT STOCK TRADING MULTIPLES
Can the marijuana industry get large enough – and profitable enough – to justify that kind of valuation?
Here's how the numbers shake out.
First, let's look at demand for cannabis: Statistics Canada published a study in January that estimated Canadians spent $5.7-billion on marijuana in 2017, when the product was still illegal. The agency figured 4.7 million citizens smoked, vaped or baked hash brownies, consuming 773,000 kilograms of marijuana. Obviously, most of the supply came from black-market sources. Statscan pegs the average price at $7.43 a gram.
Average national cannabis price
Per gram
Medical purposes
Non-medical purposes
7.007.508.008.509.009.50$10.0020102011201220132014201520169.069.06
THE GLOBE AND MAIL, SOURCE: STATSCAN
DATA
SHARE
×
Characteristics Medical purposes Non-medical purposes
2010-01-01 9.06 9.06
2011-01-01 9.14 9.14
2012-01-01 9.3 9.3
2013-01-01 9.5 9.4
2014-01-01 9.27 9.05
2015-01-01 8.92 8.5
2016-01-01 8.69 8.09
2017-01-01 8.18 7.43
Not well for the people who think they've got it made....
Its crumbling ...seen it happen before..been through it.
These ones who lost half their profit wont see it again soon
OH THAT'S RIGHT NO PROFIT SO FAR HAHAHAHA
Mark them words little mindless investors!!
by right it should g up continually til Nov and keep going
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Lightgreen2k
Well-Known Member
The lps seem to be behind compared to what the american producers culitvate.Not well for the people who think they've got it made....
Its crumbling ...seen it happen before..been though it.
These ones who lost half their profit wont see it again soon
Mark them words little boys!
[Strains] As I have said the black market existed already.
@gb123 they plan to export, but too who?
Anothermeduser
Well-Known Member
Ha this is reality, i see a steady infiltration of lp products flooding the black market for half price, is this your stuff, smells of desperation all around. I would rather buy the trim than the shit thats trimmed, "ill take the pile of tricomes and skip that pile of buds there it all came from, no wonder the market turns to concentrates. Desperate times are a coming for some. If one cant afford to trim it with care your shooting yourself in the foot. But people are naturally stupid so some might like the nicely manicured tricome robbed weed, if they never had the good stuff they will never know.
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Canadain Closet Gardener
Well-Known Member
So what I see happening is the price of pot will plummet on the BL with legalization. I’m seeing it already, all my friends who smoke now grow legally. One friend just gave me 8 OZ as he didn't like the taste. Years ago he would have sold it too me at $200 an 0z and I would be happy with the price and quality but now I grow my own. So does everyone in our circle of friends who smoke.. My little group of friends used to spend big bucks on getting our meds. Now we only seem to spend on grow equipment.
I’m also guessing that pot has roughly the same user ratio as alcohol like 10% of the users consume around 75% of the product? I’ll bet you they will not be willing to pay $10 a gram when they are smoking 2 oz a week. Some Canadian MOM are selling at $99 an oz at the moment. That price is dropping too as more BM facilities come on line.
You will see lots of LP weed sold the first few days of legalization, maybe some temporary shortages. After the novelty wears off I'm betting regular smokers (14g a week or more) will use the black market.
You will start to see huge Native pot farms on the reserves in 2018 flooding the market as they do with Native cigarettes.
I also really don’t see it being that much of an export market for LP. Other countries are like us they want jobs for their citizens. I don’t see other countries governments spending dollars importing a product they can produce themselves and quite easily.
You will see lots more consolidation of the LPs in 2018-19 plus I’m thinking some Nortel like accounting scandals.
Something along the lines of as soon as a clone has roots it's now valued as 1kg of premium dried flower worth $15,000
Then counting 10,000 clones as $150,000,000 in assets
or counting spoiled moldy product as assets.
Cheers
CCG
The top 10 percent of American drinkers - 24 million adults over age 18 - consume, on average, 74 alcoholic drinks per week. That works out to a little more than four-and-a-half 750 ml bottles of Jack Daniels, 18 bottles of wine, or three 24-can cases of beer. In one week. Or, if you prefer, 10 drinks per day .Sep 25, 2014
I’m also guessing that pot has roughly the same user ratio as alcohol like 10% of the users consume around 75% of the product? I’ll bet you they will not be willing to pay $10 a gram when they are smoking 2 oz a week. Some Canadian MOM are selling at $99 an oz at the moment. That price is dropping too as more BM facilities come on line.
You will see lots of LP weed sold the first few days of legalization, maybe some temporary shortages. After the novelty wears off I'm betting regular smokers (14g a week or more) will use the black market.
You will start to see huge Native pot farms on the reserves in 2018 flooding the market as they do with Native cigarettes.
I also really don’t see it being that much of an export market for LP. Other countries are like us they want jobs for their citizens. I don’t see other countries governments spending dollars importing a product they can produce themselves and quite easily.
You will see lots more consolidation of the LPs in 2018-19 plus I’m thinking some Nortel like accounting scandals.
Something along the lines of as soon as a clone has roots it's now valued as 1kg of premium dried flower worth $15,000
Then counting 10,000 clones as $150,000,000 in assets
or counting spoiled moldy product as assets.
Cheers
CCG
The top 10 percent of American drinkers - 24 million adults over age 18 - consume, on average, 74 alcoholic drinks per week. That works out to a little more than four-and-a-half 750 ml bottles of Jack Daniels, 18 bottles of wine, or three 24-can cases of beer. In one week. Or, if you prefer, 10 drinks per day .Sep 25, 2014
greg nr
Well-Known Member
The US dow fell 666 points on friday, and had an even worse week. Markets hate uncertainty. Interest rate increases are looming, the us dropping out of international agreements is looming with resultant impacts to markets, and the political scene is a powder keg.
None of that bodes well for a strong market, and in a weak market, people flee to quality. The cannabis sector is as far from quality as you can get. It's risky on multipole levels as far as investors are concerned.
Sure, it's cool, but that only goes so far.
It's gonna go lower before individual stocks stabilize. But that "stable" price will be low, and they won't be growth stocks. Basically they will trade around their value points.
In other words, fools and their money.......
None of that bodes well for a strong market, and in a weak market, people flee to quality. The cannabis sector is as far from quality as you can get. It's risky on multipole levels as far as investors are concerned.
Sure, it's cool, but that only goes so far.
It's gonna go lower before individual stocks stabilize. But that "stable" price will be low, and they won't be growth stocks. Basically they will trade around their value points.
In other words, fools and their money.......
Anothermeduser
Well-Known Member
Comes and goes, definetly is a different swing than we have seen but i still equate it to 15+yrs back nobody was going to jail because of lieniency, everone went out and started growing, price dropped for awhile then it came back as the market just got flooded with crap, then lots of cheap used equipment for sale everywhere, market will come back when the parasites settle in, there swarming right now. Most folks have no comprehension of the swings the market has seen as its all new and taught by dreamers and speculators thinking they are quick enough to pull a fast one.coming from a true Rank Amateur
it comes and
IT GOES BACK TOO
lmao..