Leafbuyer Technologies Inc (OTCMKTS:LBUY) has been enjoying a fantastic bull run over the recent past.
The company which is readying itself for entry into the recreational cannabis sector seems to be enjoying a thumbs-up from investors and other speculators who have accorded it one of the highest valuations in its trading history. This was shown this past month with a share price surge from below $1 to highs of $3 and settling at $2.15.
This high valuation was accompanied by a surge in their shares traded which also rose to nearly 1.5 million towards the end of December. This is shown in the chart below:
With such a price recovery in the making, we decided to take a closer look at the stock and explain why the market is giving it such a boost as has been seen here.
However, before then, let us take a brief look at the history of the company.
LBUY: A Brief
Leafbuyer Technologies Group is a technology-based cannabis marketing company which was formed back in 2013 and incorporated in Nevada.
Since then, the company had built its online presence through their web platform. This platform brings people together by providing them with the best deals and specials within the cannabis space. Furthermore, they link people with the cannabis dispensaries all over the country through this same platform.
The company has come to be a one-stop shop for cannabis partakers through the provision of high-quality products to their clients.
The company began the month of December with a major announcement on its expansionary strategy.
LBUY signed an expansionary agreement with two major dispensaries, Sweet Leaf Marijuana Centers, and Green Dragon Cannabis Co. The former operates ten dispensaries within Colorado and one in Portland, Oregon while the latter operates 11 locations in Colorado.
The company which has adopted an expansionary strategy since April 2017 and opened up to 100 stores during the period has seen their sales increase by over 28%. Their aim is, therefore, to venture out and expand their outreach to other states within the nation. Currently, their target is Florida, Nevada, Oregon, Michigan, Maryland, and Maine. Through this program, the sales and marketing teams will ensure they increase their outreach within these states.
Their head of business development, Mark Breen, stated in his speech:
“By adding these two dispensary chains, we reinforce our dominance in the cannabis deals space in Colorado. These two chains alone represent three-percent of the overall Colorado market… Leafbuyer has developed significant long-term relationships with multiple dispensary chains in Colorado,”
The Californian Market
The Californian market now one of the biggest cannabis markets in the world.
Through the legalization of cannabis within this space coupled with a population of over 39 million people -with 70% of these people being over 21 years – and five times that number in tourists, the market provides a $2.5 trillion economy and about $3.9 billion and $5.1 billion in sales for the 2018 and 2019 periods respectively. This makes it the sixth largest economy in the world.
With such loveable statistics, the management of Leafbuyer chose to venture into this space.
Leafbuyer Technologies Inc worked at venturing into and growing within California through a strategic venture they have adopted for the 2018 period.
They plan to use their platform to connect people and dispensaries within California. They will work at ensuring all customers can access the best dispensaries within the state and those that offer the highest quality of produce to past clients.
Their CEO, Kurt Rossner, had this to say:
“Having extensive experience in the Colorado market, we look forward to building a thriving business in the California market which, is anticipated to be 5 to 7 times the size of Colorado’s established market. We look forward to expanding across California and building our business in additional markets in the U.S. and Canada in 2018 and beyond.”
With their entry into this space, the firm is working at ensuring they can reap the benefits of a high-growth cannabis market which is expected to grow to $50 billion by 2026. Through this, their revenues are expected to grow into the future and their cash flows to turn positive, a move that will be beneficial to their valuation into the long term.
Leafbuyer Technologies Inc just achieved a 43% growth between November 2017 and 2018.
Their revenues in the third quarter of 2017, 3Q2017, they made $231,000 in sales which were quite the increase when compared to no revenues last month. However, this was a reduction of $3,000 from the second quarter of 2017, 2Q2017.
The company further has a working capital deficit of $15,000 which, despite being minimal, needs to be managed.
Eventually, despite the above mishaps, the company seems to be taking the right trajectory regarding their operations. We expect that they will accomplish their goals in the coming period and utilize their opportunity within California to make ample returns.
Growth is imminent for LBUY as is their financial success. With their strategic developments and ventures into the California space, we expect that they will continue to tap into the sixth largest economy in the world and turn both a profit and cash flow positive. As such, we remain bullish about the company’s share price and future outlook.
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Disclosure: We have no position in LBUY and have not been compensated for this article.
Image courtesy of Jurassic Blueberries via Flickr