Canopy Growth Stock Forecast
There’s a new buzz surrounding marijuana stocks and for once, it doesn’t have anything to do with legalization or really marijuana at all. Instead, this wave of excitement is being propelled by what is otherwise pretty standard fare: stock market listing choices.
Many companies are now eyeing a Nasdaq index listing to help boost their stock prices, with Canopy Growth Corp (OTCMKTS:TWMJF, TSE:WEED) having made public its plans to land on itself on the Nasdaq. With the TWMJF stock price today sitting at a hair under $23.00, Canopy could be in store for a serious jump in value should it be able to migrate its listing to a big U.S. stock market like the Nasdaq.
This goes beyond speculation. Proof is readily available by way of Cronos Group Inc (NASDAQ:CRON), which last week became the first Canadian marijuana stock to list itself on the Nasdaq. As a result, the company shot up about 35% in five days.
The simple fact is that there is a lot of untapped capital waiting in the U.S. held by investors eager to get into the marijuana market but leery of over-the-counter stock buys or the Canadian stock exchanges. Considering that marijuana is still making the transition—at least in the public eye—from illicit drug to legal commodity, many investors want the comfort of legitimacy that a massive stock exchange like the Nasdaq connotes.
This isn’t to say that the Canadian exchanges are illegitimate. But they simply don’t have the heft of the Nasdaq, nor do they have the same amount of influence. Being on the Nasdaq, for many investors, essentially announces to the world that a company is safe, legitimate, and ready to be traded. In this case, whether or not that is true is irrelevant. It’s all about perception in the eyes of investors, many of whom may not be familiar with the marijuana stock market and therefore are taking cautionary approaches to putting money in pot stocks.
And that brings us to the Canopy Growth stock forecast.
The company is already one of my personal favorites in the industry, due to its international focus, strong foundations as the largest player in the market, and what has been a strong year for the company in terms of numbers, if not stock value.
Chart courtesy of StockCharts.com
While the WEED stock forecast in 2018 has been muted so far as a result of a harsh correction that took place in mid-January and continued through February, the rest of the year is shaping up to be a strong one for marijuana as Canadian recreational pot legalization is set to roll in during the summer.
Aside from that, companies like Canopy Growth have begun centering their attention on European markets as medical marijuana is becoming more readily available on the continent.
The company recently scored a big win in Germany, with sales topping seven figures for the first time. (Source: “Canopy Growth doubles cannabis sales, while MedReleaf takes smaller strides,” Financial Post, February 14, 2018.)
The company also inked a deal with Constellation Brands, Inc. (NYSE:STZ), a major U.S. liquor company, valued at CA$245.0 million.
Its most recent earnings report also yielded big numbers, with a year-over-year registered patient growth of 138%. Revenue skyrocketed by 123% to reach CA$21.7 million, up from CA$9.8 million.
So I already marked a positive Canopy Growth stock forecast, which has only become more bullish since the company announced plans to take its listing to the Nasdaq.
With marijuana stocks all looking to gain a competitive edge on each other in what is one of the most exciting and fasting growing industries around, landing itself on the Nasdaq would pay huge dividends to WEED stock.
Like Cronos, Canopy would likely be the recipient of a nice, fast boost in stock value in the direct aftermath of a Nasdaq listing. While that rush will likely end in a correction, I believe that the stock will, on balance, have gained several percentage points overall in a short period of time, with as high a gain as 10%+ in a week when all the smoke clears.
Beyond that short burst of value, the company will also become the target of investment by many formerly skittish American investors. That new influx of capital could lead to significant gains for the stock. Of course, too fast of a leap will eventually lead to a correction due to fear of overvaluation, but again, I suspect that, on balance, Canopy Growth stock will come out ahead.
“When Constellation put money into our business, the number of U.S. institutional investors interested in us went way up,” Canopy Growth Chief Executive Officer Bruce Linton said at the Economic Club of Canada last week. “The Nasdaq is doing a great job not allowing people to list who break federal laws and that’s a place where we should list in due course.” (Source: Canadian weed producer Canopy should list on Nasdaq ‘in due course’: CEO,” Reuters, March 1, 2018.)
Linton said that Canopy was intent on putting itself on the Nasdaq as far back as October, but it wanted to sort out its deal with Constellation before making the move.
“We prepared to list in October and we pulled it back, because trying to do the deal with Constellation was already 11 months of complexity,” he said. (Source: “Canopy Growth eyes potential Nasdaq listing,” The Financial Post, March 1, 2018.)
“The step will be list — and get ready for the drum roll — there will be a $75-million U.S. placement-ish. And it’s just because the economic model works for the people who took you public and give you coverage to get a listing out there.”
Ultimately, it does look like a Nasdaq listing is in the cards for Canopy, and that is great news for Canopy Growth stock investors. And, as Linton’s remarks show, the company is clearly interested in gaining more attention from U.S. investors, which is the right move in my estimation.
With so many concerned over a U.S. marijuana crackdown, it makes sense why people would want to see companies listed on the Nasdaq before they put their money in. There’s a lot of uncertainty concerning how the U.S. views marijuana (which I’ve devoted considerable virtual column inches to).
While I believe that the talk about a U.S. attack on marijuana is ultimately far more smoke than fire, it is still a possibility and therefore a perfectly valid reason for more cautionary investors to take their time before rushing into the marijuana market.
But when you consider the Canopy Growth stock forecast, there is a price for waiting as well. I believe that the company is poised to see big gains throughout 2018, with a Nasdaq listing and Canadian marijuana legalization being two separate but potentially powerful events for the stock, with massive gains a possible outcome.
In both cases, we’re also likely to see wild swings both up and down, but I believe that will all end with a Canopy Growth stock that is stronger tomorrow than it is today.
Investors may want to keep an eye out for when Canopy Growth appears ready to list on the Nasdaq because a big stock boost will likely follow.