Curaleaf Stock Forecast: Should You Consider This US Marijuana Company?

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Curaleaf Stock Forecast

As marijuana stocks took a huge tumble on October 29, a new cannabis company made its debut on a stock exchange north of the border: Curaleaf Holdings, Inc. (CSE:CURA).

Because Curaleaf is a very new name in the market, information on the company seems rather limited. For investors searching for a Curaleaf stock forecast, here’s what you need to know.

Who is Curaleaf Holdings, Inc.?

Headquartered in Wakefield, Massachusetts, Curaleaf is a vertically integrated cannabis operator. The company currently owns and operates 28 dispensaries, 12 cultivation sites, nine processing sites, and has a presence in 12 states.

On Monday, October 29, Curaleaf started trading on the Canadian Securities Exchange (CSE) under the ticker symbol “CURA.” Note that the company did not complete a traditional initial public offering. Instead, it went public through a reverse takeover, a process that allows companies to go public by rolling into listed shell companies.

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“Listing on the Canadian Securities Exchange is a critical step in our growth trajectory. We are excited to make our mark within cannabis financing history through the overwhelming support of over 100 institutions internationally,” said Joseph Lusardi, Curaleaf’s Chief Executive Officer.

“We remain committed to growing our business through aggressive organic growth and the strategic deployment of capital into accretive acquisitions that extend our brand into the most attractive U.S. markets.” (Source: “Curaleaf Announces Closing of C$520 Million Offering and Begins Trading on the Canadian Securities Exchange Under Ticker Symbol ‘CURA’,” Curaleaf Holdings, Inc., October 29, 2018.)

First Day of Trading

How did the company do on its first day of trading?

Well, Curaleaf stock began trading at around CA$10.50 per share on Monday morning. But as the markets took a turn for the worse, so did this new marijuana stock. CURA stock closed at CA$7.30 apiece on Monday. (Source: “Curaleaf Holdings, Inc.,” Canadian Securities Exchange, last accessed October 30, 2018.)

However, keep in mind that stocks were falling across the board, and investors seemed to be turning on their “risk off” mode. On Monday, the CSE Composite Index, a broad indicator of market activity for the Canadian Securities Exchange, dropped a whopping seven percent.

Had CURA stock made its debut a month or two earlier, when pot stocks were shooting through the roof, investor sentiment could be quite different towards this cannabis company.

Curaleaf Valuation

While Curaleaf’s share price performance was less than stellar on its first day of trading, the company still boasts a hefty valuation.

You see, in connection with its listing on the Canadian Securities Exchange, Curaleaf also raised CA$520.0 million (US$400.0 million) in a private placement. This marked the biggest equity raise in Canada’s cannabis industry.

At the same time, Curaleaf’s equity raising also gave it a market value of around $4.0 billion, making it one of the bigger players in the pot industry.

Curaleaf Stock Financials

Because Curaleaf has been trading on the stock market for a very short period of time, it has yet to report earnings as a public company. However, in the company’s listing application, management did provide some consolidated financial information.

By going over this information, we see that in 2016, Curaleaf generated total revenue of $3.7 million. In 2017, the amount had grown to $19.3 million, marking a 422% increase. (Source: “CSE Form 2A Listing Statement,” SEDAR, last accessed October 30, 2018.)

In other words, the company is running a fast-growing business.

At the same time, Curaleaf is also pursuing an acquisitions strategy. The company has bought quite a few businesses since its formation in 2010. Going forward, acquisitions in the U.S. could further expand Curaleaf’s presence.

Analyst Take

In an era where Canada’s legalization of recreational marijuana is all the rage, Curaleaf’s U.S. operations still deserve investors’ attention.

Because U.S. laws for marijuana tend to differ state by state, American cannabis companies often just focus on operating in one state. With a presence in 12 states, Curaleaf could provide a unique opportunity for those who want a broader exposure to the U.S. marijuana industry.

Of course, with detailed financial information and operating metrics yet to be released as a public company, it’s hard to say where the stock would go. However, due to the company’s expanding business and acquisition strategy, CURA stock deserves a spot on a growth investor’s watch list.