Pot stock to watch MedMen Enterprises (MMEN Stock Report) (MMNFF Stock Report) is without a doubt one of the most important cannabis companies in the United State. So far they have made a name for itself for its high profile promotional campaigns. While that may get a company a lot of publicity, it might not actually be enough to sell to potential investors. Investors look at a business from a different perspective altogether and the first they look for are the fundamentals.
Does This Pot Stock Hold The Key
Pot stocks have been in a bit of turmoil over the past few months. During that time MedMen made an announcement that must not have come as great news for investors.
For many months, the acquisition of PharmaCann had been touted as the next big leap in MedMen’s relentless growth story. However, on October 8 the company announced that it was not going to complete the all-stock deal worth $682 million. The deal had been announced last year and it could have transformed the company into a national operation, with a presence in all the major states. On its own, MedMen is operational in the West Coast and pockets of California.
The deal would have given MedMen control of PharmaCann’s considerable retail network and growing facilities. However, it seems that the declining stock price over the past months has finally taken a toll on the deal.
Fixing the Issue in The Market
Although the decline of this pot stock may affect the deal directly since PharmaCann was going to be issued the same number of MedMen shares, regardless of the price of the stock. Hence, it is quite possible that PharmaCann might have balked at the idea of owning a marijuana stock that had declined in price significantly. In addition to that, MedMen might also have needed to raise a lot of cash in order to invest in PharmaCann assets. The Chief Executive Officer of MedMen, Adam Bierman spoke about the situation. He said, “We don’t want to be raising money at the stock prices, which are overly diluted, in order to go fund projects that aren’t going to be near- or mid-term accretive.”
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The cancellation of the deal at a time when the company’s Chief Financial Officer is going to be replaced must not have sent the right message to the markets either. Over the past year, the stock declined by as much as 80% as well and it is not a surprise that the deal has broken down. At this point in time, it may be better to avoid the MedMen stock.