A Closer Look at Hydropothecary Corp
In recent weeks, Hydropothecary Corp (OTCMKTS:HYYDF, CVE:THCX) has made some bold moves that could raise its potential from “strong” to “explosive.”
We’re going to unpack some of those developments below. However, if you’re already familiar with the Shopify Inc (NYSE:SHOP) partnership or the Segra International Corp. partnership, you might want to skip ahead to our Hydropothecary stock forecast.
For those less familiar with the company, here’s a quick snapshot:
- Hydropothecary is a Canadian medical marijuana provider.
- It operates out of Gatineau, Quebec.
- It has one 50,000 square foot facility currently in operation.
- It has another 1.25 million square feet scheduled to become operational in 2018.
- It offers 24-hour bilingual customer service.
It’s this last point, customer service, that sets Hydropothecary apart from the parade of marijuana stocks available to investors.
Why, you ask? Well, because branding matters in a crowded market. And giving customers a smooth and sophisticated experience is a good way to build a brand.
On a broader note, Hydropothecary stock is riding high on Canada’s imminent legalization of adult recreational marijuana. THCX stock has advanced 175% from May 2017, which is approximately 14 times better than the S&P 500 Index.
You can see that explosive growth in the below stock chart.
Chart courtesy of StockCharts.com
There’s no doubt that Hydropothecary is, like its peers, benefiting from the changing perceptions about marijuana consumption. But is that enough to keep the stock soaring?
Sure, a rising tide lifts all boats. But at a certain point, the flimsiest ships slip under the waves while the strong ones make it to safe harbor. What will be Hydropothecary’s fate?
The answer may lie with two new partnerships that the company formed this year.
Shopify Partnership and Cannabis E-Commerce Services
Hydropothecary’s first partnership is with Shopify Inc, an e-commerce giant that helps companies expand their online presence. (Source: “Hydropothecary selects Shopify to power ecommerce services for medical and recreational cannabis markets,” GlobeNewswire, March 20, 2018.)
I like to think of Shopify as an online shopping mall. The only difference is that, instead of leasing out retail space, Shopify provides the tools and the platform to successfully run an e-commerce business. It is “tech support” meets “Web design” meets “data analytics.”
The real genius of the Shopify partnership, however, is its cost-cutting.
Think about it: without spending on brick-and-mortar locations, Hydropothecary would have fewer expenses than its peers. And logic dictates that this leads to a) more profit or b) lower prices (or both). So, Hydropothecary scores points in either scenario.
In other words, the Shopify partnership can help Hydropothecary conquer the online legal marijuana market, which is poised to bring in billions of dollars in the next decade.
Segra Partnership and Cultivation of Cannabis Products
Hydropothecary’s second partnership is with Segra International Corp., a company specializing in “plant tissue culture propagation.”
What does that mean, you ask? Well, without getting too technical, it means that Segra will engineer Hydropothecary’s plants to maximize their yields. (Source: “Hydropothecary partners with Segra to scale-up production in preparation for cannabis legalization,” GlobeNewswire, March 16, 2018.)
If this announcement slipped under the radar, it’s because it has to do with the technical aspects of growing marijuana. But don’t let the jargon fool you. The Segra partnership is an important part of Hydropothecary’s e-commerce strategy.
You see, Hydropothecary Corp is a small fish in the ocean. Rivals like Canopy Growth Corp (OTCMKTS:TWMJF, TSE:WEED) could put the company out of business by running short-term losses, so Hydropothecary needs an edge.
Every dollar, every square foot, every ounce of marijuana—it’s all instrumental in ensuring higher prices for Hydropothecary stock.
Hydropothecary Stock Forecast
Overall, I think there’s a lot of promise in the Canadian marijuana market. I also believe that an e-commerce strategy is a smart way to go. So naturally, I’m pretty bullish on Hydropothecary stock, especially now, with the Segra partnership and the Shopify partnership.
That being said, the market is pretty expensive right now. A correction in the near term wouldn’t be entirely crazy, but, looking ahead to 2019, I think it’s safe to say that we might see HYYDF stock hit somewhere between $5.00 and $7.00.