Marijuana News Today: Is This the Next Big Marijuana IPO?

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Marijuana News Today

In the marijuana news today is an initial public offering (IPO) that gives investors yet another avenue into the U.S. pot market, this time through Acreage Holdings.

According to the company, the Acreage Holdings IPO is set for the Canadian Securities Exchange (CSE). Even though it’s a Canadian exchange, it will see American investors gain another way to invest in the burgeoning legal U.S. marijuana market. Acreage Holdings maintains operations in 13 U.S. states. (Source: “Cannabis company Acreage Holdings plans for Canadian IPO,” CNBC, July 23, 2018.)

The Acreage Holdings IPO comes after the company secured $119.0 million in capital via its Series E funding round. The company says that this is the largest private funding round in U.S. cannabis history. It reflects the growing interest of investors in the emergent legal marijuana industry as it continues to expand.

“The combination of monies raised and the rollup cements Acreage as one of the best capitalized companies in the industry with a footprint that is second to none,” said Kevin Murphy, founder and CEO of Acreage Holdings. (Source: “Acreage Holdings Announces Closing of $119 Million Private Round – Largest in U.S. Cannabis History,” Cision, July 23, 2018.)

“This gives us an exceptionally strong investment proposition to bring into the public markets in our upcoming listing,” said Murphy.

The company’s press release further explained why the company had chosen the CSE over other suitors:

We are planning on listing on the CSE for many reasons, including the positive reception that the Canadian institutional investment community has shown to the U.S. cannabis industry and to Acreage in particular. Additionally, the CSE has become the exchange of choice for U.S. companies like ours.

Murphy added, “The liquidity on the CSE is incredibly attractive to Acreage, and we know that retail investors in the U.S. have become comfortable with that exchange. We expect to see a tremendous response to our offering this fall.”

So what does this mean for marijuana investors?

Well, the recent Tilray Inc (NASDAQ:TLRY) IPO garnered huge interest and saw its stock price soar by almost 80% in just a few days. While the price has since fallen, the Tilray IPO has so far been a huge success.

Of course, TLRY stock benefited from being listed on the Nasdaq. It was the first ever cannabis IPO on the Nasdaq, in fact. I doubt the Acreage Holdings IPO on the CSE will be quite as exciting.

Still, there are a lot of reasons to look forward to the Acreage Holdings IPO, and I expect that we’ll see a good bit of interest in the immediate aftermath. Whether those gains will be sustainable will depend on the market, but there is potential for Acreage Holdings stock to register big gains.

Tilray Stock News

Since the marijuana news today is all about IPOs, let’s take a look back at what has been one of the most exciting IPOs in the industry’s history: the Tilray IPO.

Tilray stock nearly reached 80% in gains in its first week on the Nasdaq, but—as anyone could have predicted—the stock eventually had to fall back to earth, dropping by around 25% to settle at about 50% in gains.

That’s still a huge gain that any investor would be lucky to see in their portfolio after a single week.

But what does the future of Tilray stock hold? That’s a hard question to answer.

The reason Tilray stock jumped to such heights was primarily that it was the first cannabis stock to have an IPO on the Nasdaq. That added a “first ever” tag to the usual excitement of an IPO in an industry known as being one of the most gain-heavy in the current stock market.

All those factors came together to create the perfect storm for TLRY stock.

We’ll have to wait and see if the company can parlay the hype into long-term success as the luster of its IPO fades.

Being on the Nasdaq will attract U.S. investors, but—as other marijuana stocks on major listings can attest—being on a major stock exchange as a marijuana company is no guarantee of long-term success.

Which brings us to…

Cronos Stock News

Cronos Group Inc (NASDAQ:CRON), the only other pure-play marijuana company listed on the Nasdaq, has recently seen its fortunes reverse; its stock price dropped six percent over the past seven days.

Chart courtesy of StockCharts.com

CRON stock had been doing rather well recently, but this past week’s performance has been poor while the overall marijuana industry continues to face a pullback.

While Cronos stock declined in a steadier pattern compared to other marijuana stocks that had a bit of success this week, the result for all cannabis stocks has been roughly the same: drops of about seven percent.

Analyst Take

The marijuana news today is filled with excitement as a new IPO nears.

The Acreage Holdings IPO is by no means a sure winner, but, for day traders, there are many opportunities to score big off of cannabis IPOs.

For long-term marijuana investors, I suggest either investing very early or waiting a few months after an IPO. Those two time periods would be best if you want to avoid the hype and the usually inflated stock prices that we often see with IPOs.