MedMen Enterprises Inc (OTCMKTS: MMNFF) poor run in the market is a point of concern as short sellers remain firmly in control. The stock has shed more than 60% in market value from record highs registered in October of last year.
MedMen Enterprises Price Analysis
The stock has continued to edge lower even on the Company achieving significant milestones in pursuit of growth opportunities in the U.S Cannabis market. For starters, the Company is fresh from opening its 11th store in California in the quest of a piece of the $11 billion cannabis market.
The Company has also secured a $250 million secured convertible credit facility, consequently gaining access to much-needed financing for pursuing strategic investments. Impressive preliminary financial results for the fiscal third quarter also underscores a company firing on all cylinders when it comes to operational efficiency.
It thus comes as a surprise that the stock has continued to edge lower at a time when the cannabis sector is trending higher. The stock has since clocked a new all-time low on plunging to the $2.35 handle.
A breach of the $2.70 support level has left the stock susceptible to further drops, in continuation of the emerging bear trend. A bounce back above the $2.70 level is what is needed to avert further slides in the short term, for the stock to turn bullish and emerge as a break out play it will have to take out the $3.60 resistance level.
What Does MedMen Enterprises Do?
MedMen Enterprises is a cannabis-focused company that cultivates, produces, and distributes recreational and medicinal cannabis. The Company boasts one of the largest retail networks in the sector, having opened retail stores in some of the biggest markets such as Las Vegas, New York, and Los Angeles.
MedMen Enterprises continues to expand its retail network in the cannabis sector amidst the underperformance in the stock market. The opening of the 11th store in California positions the Company to target a broader cannabis market in pursuit of cannabis sales.
The opening of a store in Sorrento Valley affirms the Company’s push for market share in the $11 billion California cannabis market. The expansion also comes on the heels of the Company acquiring cannabis retailer Sugarleaf Trading in April.
“MedMen continues to expand its footprint in California, the most important cannabis market in the world. With this latest acquisition, we broaden our reach and capitalize on significant growth opportunities in the state,” said CEO Adam Bierman.
$250 Million Balance Sheet Boost
MedMen expansion drive might as well have received a significant boost in the Company closing a $250 million credit line financing deal with Gotham Green Partners. The Company intends to use the new financing line to fund the operationalizing of existing retail licenses. Florida is one of the cannabis marketplaces that the Company has set sights on as it currently holds licenses for 35 stores.
The revamped balance sheet should also allow the Company to move with speed and integrate assets acquired through pending transactions. In addition, MedMen is planning to accelerate geographic expansion through bolt-on acquisitions and investments in core markets.
Plans to expand into new markets come on the heels of the Company reporting impressive preliminary results for the fiscal third quarter ended March 30, 2019. The Company is on course to report revenues of $36.6 million, representing 22% quarter over quarter increase. Gross margin in the quarter shrunk to 51% compared to 53% in the previous year same quarter.
“The continued acceleration of sales in markets like Arizona and Nevada, as evidenced by the impressive sales at our Paradise location, demonstrates our ability to replicate the success we’ve achieved in our home state of California across the U.S,” stated Michael Kramer, Chief Financial Officer.
What Next For MedMen
MedMen has taken a significant hit in the market, even on the underlying fundamentals turning positive. An aggressive expansion drive has positioned the Company to be a key player in the burgeoning California cannabis market. The Company has since set sights on other markets as it continues to boost its revenue streams.
The Company reporting a 22% increase in revenues in the recent quarter is another development that underlines core business robust growth. That said the share price is yet to reflect the Company’s tremendous potential and long-term prospects. With that in mind, the stock could spike from current lows on investors taking note of the Company’s growth metrics.
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Disclosure: We have no position in MMNFF and have not been compensated for this article.