Will 2019 Be a Better Year for MedMen Enterprises?



Stock performance

On January 10, MedMen Enterprises (MMEN) (MMNFF) was trading at 4.24 Canadian dollars, representing a fall of 8.8% since its announcement of its fiscal 2019 first-quarter earnings results on November 29.

The company is currently trading 36.3% higher than its 52-week low of 3.11 Canadian dollars and 57.1% lower than its 52-week high of 9.88 Canadian dollars.

The pessimism surrounding cannabis stocks and the weakness in the broader equity market due to the Fed’s interest rate increase and concerns over the US government shutdown led MedMen’s stock price to fall to 3.64 Canadian dollars as of the end of the day on December 24.

However, on December 24, MedMen announced that it had entered into a definitive agreement to combine its business and PharmaCann’s business under a new company called New MedMen. The transaction still requires approval from MedMen’s shareholders, and it also faces regulatory and legal hurdles.

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On completing the transaction, the new combined company will have a permit to operate 76 retail stores and 16 cultivation and production facilities. It will also have the license to operate in 12 states. These 12 states cover ~50% of the US population. Cowen Group expects the addressable cannabis market for these 12 states to reach $40 billion by 2030. The optimism surrounding the acquisition drove MedMen’s stock price.

On January 8, two of MedMen’s biggest investors, Brent Cox and Omar Mangalji, sued the company for “alleged breaches of fiduciary duty,” leading its stock price to fall on January 9.

Peer comparison

From November 29 to January 10, MedMen’s peers Acreage Holdings (ACRG-U) (ACRGF), Planet 13 Holdings (PLTH) (PLNHF), and Curaleaf Holdings (CURA) (CURLF) returned 2.7%, -3.2%, and 10%, respectively. The Horizons Marijuana Life Sciences Index ETF (HMMJ), which tracks the North American Medical Marijuana Index, returned -1.0% during the same period.

Next, let’s look at analysts’ revenue expectations for MedMen in 2019 and 2020.


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