MedReleaf Corp (OTCMKTS:MEDFF) Is Due For A Big Comeback

After experiencing one of the longest bull runs in the industry, the share price of MedReleaf Corp (OTCMKTS:MEDFF) has finally seen a reversal. The company which during our last review – which can be accessed here – had just hit its all-time high of $24 has seen its share price come down to nearly half of the price then. Currently, it trades at $13.62.Readers can review the above price action in the chart below: MEDFF Daily ChartThe above price fall is not only affecting MedReleaf Corporation. On the contrary, the entire industry has felt the impact of a declining market capitalization during the month of February. In fact, an article by Forbes detailed that the prices had fallen so badly that the sector in Canada had lost over C$10 billion over the month of February.The view was that cannabis stocks had raised a lot of money courtesy of the Exchange Traded Funds in Canada – over C$1.2 billion – and this had, in turn, made the companies begin to overvalue the deals that they were getting into. As a result, the market’s correction on their stock price led to a reversal in their share price thus leading to the current predicament. The conclusion from the above was that the share price needed to be backed by fundamentals rather than by intuition and market sentiments that the industry is going up as a whole.Therefore, we have decided to take time and review one of the major players within this industry with a view to understanding its fundamentals and the drivers of their returns. This piece is therefore meant to test the feasibility of the value proposition that MedReleaf Corporation has promised its investors and whether it will translate to a higher share price in future.MedReleaf Corp: The HistoryBefore going into the intricacies, however, let us first have a look at the history of MEDFF.MedReleaf Corporation is a Canadian-based standard setter for cannabis players around the globe. It was the first and is still the only ICH-GMP and ISO 9001 certified North American cannabis producer. So far, the company has had an incline towards research and development with their motivation being the advancement of the therapeutic benefits of cannabis as well as harnessing them to improve patient care.The company which was incorporated back in 2013 sources its raw material (cannabis) from across the globe and harnesses it to produce some of the best premium cannabis products in the market. Currently, their production facilities are located in Ontario, Canada.The company has since inception grown into the large corporation it currently is. It is valued at over $1.3 billion and over 135 employees.Recent DevelopmentsThe company began the month of January on a high note by announcing a new financing deal.Through this deal, the company would raise over $100.7 million, achievable through the sale of 3.8 million share units at a price of $26.5 per share. The units would consist of one common share as well as one-half share purchase warrant – the warrant would be exercised after two years for the purchase of a share at a price of $34.5 per share subject to event adjustments.Furthermore, the underwriters were granted the option to purchase an additional 570,000 shares which would gross in an additional $15 million, bringing the total financing value to about $115.8 million.This offer was expected to close on 31^st January 2018.With the above being the case, MEDFF seems to have acquired enough capital to sustain its operations. Through this, the company can now focus on increasing its market share around the globe as well as boosting its production capacity so as to serve this growing market base. Furthermore, with days nearing to the much-anticipated federal legalization of marijuana within Canada, MEDFF seems to have obtained their finances at the optimal time.The above news was followed by news that Tikun Olam Ltd had sold about 1,000,000 common shares of MedReleaf Corporation. The shares were sold at a price of $22.02 per share thus grossing in over $22 million for the company.Tikun Olam Limited which is currently the largest supplier of medical cannabis to Israel stated that the above sale was merely for ‘investment purposes’ and that over the long term, they would buy the stock of MedReleaf Corporation via the secondary markets. The company still maintained ownership of about 9.31% of MedReleaf’s outstanding shares (about 8.8 million shares) and continues to believe in the company’s vision and value proposition even after the sale.ConclusionDespite the market’s reaction to the above industry, our outlook remains bullish. The cannabis legalizations that are taking place around the globe continue to discredit the view that the sector will fall. On the contrary, the market size continues to increase and so does their financial outlook. As such, despite the hiccups, MEDFF is still headed for a better year than it previously had.MEDFF is still on a rising streak. It has faced one of its worst runs since last year, however, with the environment being in its favor and with the market size increasing daily courtesy of cannabis legalization, the company’s share price is due for a comeback. Investors should be looking forward to this.We will be updating our subscribers as soon as we know more. For the latest updates on MEDFF, sign up below!Disclosure: We have no position in MEDFF and have not been compensated for this article.