RE:RE:RE:66% premium Ridingrockets, I would readily agree that you and probably most people know a lot more about the merits of the respective MJ products than I do. I am not well versed in this area. In fact, I couldn't tell you what any of their respective brands are. But I do know that WEED is going to be in positve EPS situation soon, and they have huge cash balance, decent and growing market share, and they have backing of Constellation. So in my opininon they have higher margin of safety and a better risk adjusted return potential going forward. And yes buying FIRE will help them. That is why they are paying a 66% premium. And they will probably do other acquisitions as well. This is the consolidation phase of the industry. I agree that if FIRE didn't have bloated share count, and they had $.05 EPS on a much reduced share count, then they would be worth more. And the market would have already bid their share price up to reflect that. And the takeover premium would then be based on that higher share price.
ridingrockets wrote: VK400S wrote: This guy f**ks !
SamRothstein wrote: I know for some of the longs that are still underwater this 66% premium might not seem great, but reality is when a company is bought the acquirer pays for current numbers not potential numbers, or what previous share price was. Based on current share prices this deal is a 66% premium. If this is too low of a premium then another player will probably step in and make higher offer now that FIRE is in play. My guess is there won't be another higher offer. But WEED is undervalued at current price and probably has better chance of climbing higher, and with a much higher margin of safety. So your return going forward, especially adjusted for risk, is probably going to be better with WEED.
Thanks VK400S for the previous comment regarding AM posting...
This guy imo is smart but I doubt he smokes weed or has much personal experience with the products if he does. He seems to think a large company with greater 'potential' is less risky than one that has been scaled down to operate within its means and can increase its growing amounts as organic growth comes. As we know that growth is being driven from Humble & Fume via increased listings - more and more dispensaries adding our products to their shelves. So long as that continues and people want to buy the best weed but ideally not the most expensive weed (which is majority of consumers best value for the money spent) than our risks are a lot lower than that of Canopy. Not one person I know smokes tweed. I am a 20+ year daily consumer. But there is a possiblity they get their act together and start selling proper weed. Though they have definitely pissed off the majority of Canadian consumers who are 25 years of age or older at one point or another. 7 Acres reputation is that of a quality product at a fair price vs what is available in the market.
That is valuable - reputation matters whereas Tweed recently was publicly called out for intentionally misleading consumers regarding the THC content of their product; well that loses customers for good. IMO Supreme was in a near EPS situation - that is REAL VALUE - imagine a quarterly .5 EPS (when our share count wasn't bloated due to this acquisition) share price? That is/was realistic based on reputation, grow capacity, and Humble & Fume getting our products into three times the amount of stores over the last year than previous. Half from last quarter alone. But my guess our SP at minimum would be 2.50 with a quarterly .05 EPS. Will Tweed ever see $250 SP let alone before Supreme gets to 80ish % grow capacity? No.