Strong price swings have been the order of the day in the marijuana stock market this year. Weed Inc (OTCMKTS:BUDZ) has found itself on the receiving end, after plunging from record highs of $15.20 a share to the $5.67 handle. While ups and downs in the space are not something new, a 60% plunge was always going to rattle investors.
The selloff came even as the company continued to strengthen its growth prospects at the back of a robust expansion drive. Weed Inc. has expanded its footprint overseas in the past one year in pursuit of sales and growth opportunity. However, it appears the market has shrugged off the development seen by the sell-off in the chart below.
Taking into consideration the recent sell-off, the stock needs to rise above the $8.4 level to be considered a bounce back play. At the current trading levels of $5.67 level, the stock remains susceptible to further declines, given the strength of the sell-off wave.
A spike to the $15.20 handle, early in the year, all but brought to light what the stock could be worth, in a few years’ time. In our previous analysis, we made the case on why BUDZ is poised for growth going forward. Nothing has changed, despite the recent sell-off, and we remain upbeat about its long-term prospects.
Weed Inc. Business Overview
Weed Inc. Is a development company that purchases land and builds commercials cultivation centers for the legal and medical marijuana sector. The company offers consultations services in the industry. It also leases cultivation centers to licensed dispensary and organic grow operators.
Its long-term plan is to become a seed-to-sale company, providing infrastructure and financial solutions in the medical marijuana market. `
Weed Inc. Investment and Expansion Drive
A spike to record highs did not come as a fluke but was as a result of investor’s reaction to Weed Inc.’s investment and expansion drive. Even though the company has been in the cannabis market since 2015, it has made exceptional strides in pursuit of sales and growth opportunities in key cannabis markets.
The company has already expanded its footprint into Australia with the setting up a Weed Australia Ltd. The wholly owned subsidiary is tasked with the responsibility of pursuing sales opportunities in the country as part of the company’s global expansion drive.
Genomic Research Facility Ambitions
Mid last year, Weed Inc. completed the acquisition of a property in La Veta Co where it plans to construct a genomic research facility. The new property is the home to the company’s wholly-owned subsidiary, Sangre AgroTech Llc, which is in the process of completing a global genomic classification of the cannabis plant.
The site includes a 10,000+ sq. ft. building that houses the genomic research facility. There is also a 4, 000 square foot building that Weed Inc. intends to use for plant product analytics and extraction. The facility underscores the company’s aspirations when it comes to research in the legal cannabis space.
Glenn E. Martin, CEO of WEED, Inc., stated, “The purchase of the Le Veta property is an important step to allow Sangre AgroTech to have a state-of-the-art facility to conduct its Cannabis genomic research and is a building block for WEED’s larger, global strategy of creating a vertically-integrated cannabis business,”
Cannabis Research Ambitions
Sangre AgroTech’s acquisition goes a long way in strengthening Weed Inc. expertise and innovation when it comes to plant biology, genetics and sound agricultural practice. The unit is currently developing cannabis-derived compounds for the treatment of various human diseases.
The Chief Executive officer remains confident that Sangre AgroTech will prove instrumental in Weed’s ultimate goal of creating disease-specific treatments and cures over the next few years.
“A comprehensive understanding of the annotated genome of a variety of cannabis strains will provide the blueprints for the development of significant medicinal products for the treatment of human diseases such as pediatric brain cancer, PTSD, epilepsy, chronic pain, and Crohn’s disease,” Dr. Patrick Williams, President and Chief Science Officer of Sangre AgroTech.
Weed Inc. 2018 Prospects
Volatility in the marijuana stock market has been high this year, a move that has led to the underperformance and outperformance of some stocks. Weed Inc. is one of the stocks that has underperformed by standards, even though it is still trading at 2017 highs.
A plunge from $15 a share to the $5 a share handle was always going to arouse concerns among investors. However, that should not be the case if the stock is to be viewed as a long-term play. Weed Inc. has already shown that it has the potential trade higher at the back of solid fundamentals.
Expansion into new markets should go a long way in strengthening the company’s sales channels in addition to diversifying its revenue streams. Sangre AgroTech investment is another development that makes it an attractive pick in the space, given the unit’s ambitions of coming up with novel treatments for various illnesses, while leveraging Cannabis compounds.
Just as was the case in our previous analysis Weed Inc. remains well positioned for more growth going forward. We remain bullish about the stock’s prospects as a long-term play.
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Disclosure: We have no position in BUDZ and have not been compensated for this article.