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Cannamerica Brands Corp (OTCMKTS:CNNXF) Battered But Not Yet Out

Cannamerica Brands Corp (OTCMKTS:CNNXF) Battered But Not Yet Out
Written by
Jim Bloom
Published on
February 21, 2019
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Expansion into Europe is one of the reasons why Cannamerica Brands Corp (OTCMKTS:CNNXF) is showing signs of breaking out after a period of consolidation. Price gains at the back of high turnover in traded shares could indicate that the stock is due for a major bounce back.

Catalysts and Share Price Analysis

The company balance sheet is on course to receive a significant boost on the closing of the first tranche of a brokered private placement. CannAmerica is staring up to $10 million in gross proceeds, funding that would go a long way in accelerating the company’s push for market share in the cannabis sector.CannAmerica sentiments in the market have also inched higher on the management reiterating they are fully committed to pursuing revenue and growth opportunities in Colorado $6 billion cannabis market. The string of positive developments continues to strengthen investor confidence in the stock.The stock has since bottomed out of the $0.24 mark and is currently flirting with the $0.28 level. The emerging uptrend faces immediate resistance at the $0.40 mark, above which bulls could push the stock to the $0.50 mark. CNNXF Daily ChartFor CannAmerica to turn bullish, after turning bearish early in the year, it needs to surge and stabilize above the $0.60 mark. On the downside, the stock faces support at the $0.24 mark. A breach of the critical resistance level could open the door for short sellers to continue pushing the stock lower.

About CannAmerica

CannAmerica is a marine-founded cannabis company that operates a portfolio of cannabis brands. The company also boasts of cannabis licensing agreements in some of the biggest cannabis markets in the U.S. Its primary goal is to enhance and demonetize the global reach of existing cannabis brands.

Strategic Partnerships

Price action activity around CannAmerica shares has picked steam in recent sessions in response to the company signing a number of deals as it continues to pursue new opportunities for growth. Top on the list, is the signing of a letter of intent that paves the way for the company to enter the European Cannabis market.The company has since signed a licensing agreement with Winchester MD Limited for the manufacture and distribution of CannAmerica brands in Europe. Under the terms of the agreement, CannAmerica is to provide Winchester with cannabis supplies and equipment in exchange for royalty payments.

"The Company is excited to expand CannAmerica Brand's reach into Europe and thrilled to be doing so with a partner that has been quickly building a reputation as a provider of high-quality CBD products," said Dan Anglin, CEO and Co-Founder of CannAmerica Brands.

In January, the company signed a binding letter of intent with Invictus MD Strategies Corp and Distribution Company Ltd for the acquisition of hemp biomass for extraction as part of a joint venture.The joint venture has since entered into a binding letter for the acquisition of membership interests in Z3 Sciences LLC as well as performance incentives of up to $42.25 million. Z3 is also to supply the joint venture with cannabis extraction contracts.

"The acquisition of a top-quality extractor is expected to give our partnership the ability to generate revenue immediately, fill current and new orders for CBD products, and meet the growing demand for high-quality CBD products in the United States. While Z3 does have existing contracts for its CBD isolate CannAmerica plans to use Z3 produced CBD isolate in CannAmerica branding products eventually,” said Mr. Anglin.

The formation of the joint venture comes at a time when CannAmerica is increasingly pursuing opportunities in the Colorado cannabis market. The market has already surpassed the $6 billion mark in sales. The company has contributed to the growth, having sold over 14 million cannabis-infused gummies since inception.

Bottom Line

CannAmerica is still languishing at all-time lows after feeling the full force of short sellers over the past few months. However, the stock has started showing signs of bottoming out in response to improving fundamentals that continue to strengthen investor confidence.Expansion into Europe is a milestone achievement that paves the way for the company to strengthen its revenue streams. In addition, the formation of a joint venture for cannabis extracts is another development that paves the way for the company to strengthen its revenue streams in pursuit of shareholder value.The stock’s sentiments in the market should continue to improve as investors react to the ever-improving fundamentals. Given the underperformance of the past few months, it will be wise to wait for the stock to surge and stabilize above the $0.40 mark, to consider it a long-term investment play.We will be updating our subscribers as soon as we know more. For the latest updates on CNNXF, sign up below!Disclosure: We have no position in CNNXF and have not been compensated for this article.

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