There have been numerous moves which have been made by Namaste Technologies Inc (OTCMKTS:NXTTF) to ensure that they boost their shareholder value. However, most of these have been overridden by the current legal action against the firm. The firm’s reputation has been marred by the class action lawsuit which continues to implicate them in securities fraud leading to losses for their investors.
Despite this, NXTTF hasn’t been stopped from continuing to engage in acquisitions and activities meant to ensure value to their shareholders in maximized. This has entailed continued aggressive marketing thus increasing their sales as well as strategic acquisitions meant to boost synergies. The results of the above have been nothing but outstanding.
Over the course of the past year, however, Namaste Technologies’ share price has gone through both surges and declines – with the declines attributable to the class action lawsuit against them. The decline in price since February was consistent, changing only in September as a result of news of their venture/entry in the Canadian cannabis industry. While this was the case, the period between February and September showed minimal trading action and this was followed by a consecutive bear run as from mid-September. This share price action is as shown below:
It thus comes as a relief to investors when there was seen to be an increase in the firm’s share price. Over the past two days, the firm’s share price has risen from trading just shy of $.9 to their current price of $1.04, a 15.5% accretion in value. Furthermore, over 500,000 shares of the stock were traded during this period as shown in the chart below:
This surge and the aforementioned campaigns have been critical to the firm’s accretion in value. That said, we opted to analyze whether this was a short-term increment and whether its impact would be short or long-term. In doing so, we further evaluated the current legal environment an concluded with a company outlook as seen later in this piece.
Namaste Technologies: Then till Now
Namaste Technologies was founded back in 2005 and its headquarters based in Toronto, Canada.
The firm operates by integrating two sectors: technology and cannabis; achieved by creating a global e-commerce cannabis platform. Herein are 30 websites available in over 20 countries whereby individuals and firms can shop for their favorite cannabis products. this has led them to have their brand: Your Everything Cannabis Store™. They have continued to grow their product offering through their ever-increasing subsidiaries and now distribute CBD products, accessories, vaporizers and glassware.
Currently, Namaste’s strategy involves their venture into the medical cannabis segment as they continue to grow their product offering in a bid to grow their market share and consequently their revenues.
Since our last review, the company has engaged in a number of activities which have affected their price movements as follows.
Strategic Investments and Expedited Delivery
Namaste Technologies has over time developed their brand around the objective of becoming Canada’s online one-stop platform for cannabis and cannabis-based products. To achieve this, the firm first created the platform atop which such business can be carried out. With that done, the institution is now working a way of bringing the product to the platform and this is the reason for this current investment.
As of August 29,2018, Namaste’s wholly-owned subsidiary, Cannmart Inc signed an agreement with Kief Cannabis which would see them have the right of first refusal (ROFR) to 35% of the total production of premium cannabis by Kief. Given the product shortage which has rocked Canada, this deal would see Cannmart provide a solution to the current problem, allowing them to cement their position in the already robust market.
Following this, Namaste has further subscribed and completed a transaction entailing an acquisition of 46,729 Class B shares of Kief Cannabis Company Ltd at a price of $5.35 per share. This represents 3% of the total outstanding shares of Kief and was based on an $8.1 million valuation. In doing this, NXTTF has further underscored their position in the cannabis market and firmed up their cannabis distribution objective.
Moreover, this follows the firm’s receipt of a sale of medical cannabis license from Access to Cannabis for Medical Purposes Regulations (“ACMPR”), the first of its kind in Canada, which allows them to purchase cannabis from a wide assortment range while distributing the product on their online platform.
In a bid to improve efficiency, Cannmart announced that they have signed a deal with Pineapple Express Delivery Inc to launch a same-day delivery service for its cannabis products within Toronto. Through this, the firm expects to grow their market share by harnessing the power of efficient delivery services and suitable pricing mechanisms. Their pricing options include rush-order delivery which will be priced at either a $30 flat-rate or $15 for orders over $200 or same-day delivery priced at $15 per delivery or free for orders over $200, subject to time zones and terms and conditions. Namaste Technologies is backing on this delivery system to scale their operations and act as a value addition which they can pitch to firms so as to onboard them onto the platform. This evolution in the logistics of both firms is expected to cement their growth, especially within Canada.
Upon this backdrop and by onboarding Kief, the company has created the first partnership which they believe will be the precursor to other successful onboardings on their global platform. Already the firm has stated that they have positive responses from other cultivators, therefore, their outlook on 2019 is quite bullish especially on their growth as well as sales.
The Black Friday Effect
Namaste announced that it had hit record sales of $1.25 million over Black Friday and Cyber Monday. This followed a period of intense marketing which culminated in the firm recording their highest ever sales figure.
Management spoke to the above sales figure being driven by vaporizers and smoking accessories. This was an especially important holiday being the first one since the legalization of cannabis in Canada. Given this, the firm is bullish about their revenue potential in 2018 and stated that their globalization strategy will see them venture – through their online platform – into the UK as well as other overseas markets.
Given the new platform which allows Namaste Technologies to scale both within Canada and globally and improve operational efficiencies as well as their current operating successes, the firm seems to be taking a step in the right direction. In line with this, their trajectory is therefore expected to be headed further into the green zone, therefore, higher capital gains are expected for investors. We are therefore bullish about NXTTF.
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Disclosure: We have no position in NXTTF and have not been compensated for this article.