Will This $0.41 Stock Become the Amazon of Pot?
Namaste Technologies Inc Could Become Huge
Despite the lack of investor enthusiasm toward pot stocks in recent months, the cannabis industry has been firing on all cylinders. From the latest earnings reports, we saw that many marijuana producers are still churning out very impressive growth rates.
However, companies that grow marijuana plants are not the only ones capitalizing on this booming industry. For instance, due to the trend of consumers shopping online more often, e-commerce platforms for pot can have serious potential.
But because cannabis remains a controlled substance in many jurisdictions, you can’t just list weed products on Amazon.com, Inc.’s (NASDAQ:AMZN) web site. Selling cannabis online is quite a bit more complicated.
And that’s why today I want to talk to you about a company that could become the Amazon of pot: Namaste Technologies Inc (OTCMKTS:NXTTF, CVE:N).
Headquartered in Toronto, Ontario, Canada, Namaste Technologies is a marijuana technology company that aims to deliver the ultimate online customer experience for medical pot and related products.
Although Namaste trades on the TSX Venture Exchange , investors in the U.S can find the stock over the counter under the symbol “NXTTF.”
Namaste Technologies Inc (OTCMKTS:NXTTF) Stock Chart
If you take a look at the Namaste Technologies stock chart, you’ll likely feel a little disappointed.
Chart courtesy of StockCharts.com
The company’s share price spiked about a year ago, but, starting in the third quarter of 2018, it entered into a downtrend and is yet to make a meaningful recovery.
Over the past 12 months, NXTTF stock has gone from $2.16 to $0.41, marking a staggering drop of more than 80%. Ouch!
In an era when there’s a lot of uncertainty in the markets, a falling low-priced pot stock certainly looks risky. But for investors who understand the underlying risks in the cannabis industry, Namaste Technologies deserves a look.
Namaste’s Marijuana E-Commerce Business
As mentioned earlier, due to the legal complications with cannabis, you can’t just put products for sale on regular e-commerce web sites. But this is a time when consumers can get virtually everything they need with the click of a mouse, so it would be great if patients could also order medical marijuana online.
And they can, thanks to Namaste Technologies Inc.
The company started with NamasteMD.com, an integrated telemedicine application that connects patients with healthcare practitioners to receive and renew cannabis prescriptions online more conveniently.
The platform, which has become available on both “iPhone” and “Android” devices, is Canada’s first fully compliant medical cannabis patient portal.
Just like Amazon, Namaste takes a cut from each transaction. The company usually collects between 15% and 20% of the gross revenue derived from patient purchasing, through referrals to licensed producers under NamasteMD.
The company also owns CannMart, an online cannabis store that offers clients a wide variety of strains to fill their prescription needs. Notably, CannMart has the first Canadian medical-sales-only marijuana license.
To complete the ecosystem, Namaste uses a unique artificial intelligence (AI) engine to help identify the right products for customers’ specific medical cannabis requirements.
In particular, the company’s “Uppy” app tracks customers’ usage patterns, medical needs, and product reviews to offer more personalized recommendations.
“It gives patients a tool that allows them to quantify what a specific strain does for them – whether it is a positive or negative impact on their symptoms, the time of day they used it, the quantity, all of those things,” said Meni Morim, Chief Executive Officer of Namaste Technologies Inc. (Source: “Meet the AI-powered cannabis app that wants to help you find the exact high that you’re looking for,” AgFunderNews, July 30, 2019.)
“On the back end, we collect all of this data anonymously and use it to train the machine learning models so that the app can tell a patient with specific symptoms which strain had the best results for people who also had those symptoms,” he continued.
Because there are so many different cannabis brands and products on the market, Namaste’s AI engine could help make its customers’ decision-making process easier.
While pot e-commerce is still a relatively new concept, the company has done a decent job at monetizing its platform. In the second quarter of Namaste’s fiscal-year 2019, which ended May 31, the company generated CA$4.0 million in consolidated revenue, with a gross margin of 21%. (Source: “Namaste Technologies Reports Second Quarter 2019 Financial Results,” Namaste Technologies Inc, July 18, 2019.)
Analyst Take
Don’t forget, while Namaste stock is a beaten-down ticker at the moment, the company has built a solid presence in the cannabis industry.
Namaste has launched 32 customer-focused web sites in 20 countries around the world. And thanks to its multiple global warehouses, the company has served nearly two million customers.
As the legal cannabis industry continues to expand, online pot sales will likely continue to rise. As a leading e-commerce platform for cannabis products, Namaste Technologies Inc stands ready to capitalize on that trend.
