Investors kneejerked to the latest nrin regards to trading debt for shares. I got that they think there could be up to 7% increase in sharefloat when the dust settles.
That makes the lenders pigs in the bacon and eggs story. They are committed and will want what all of the other shareholders want which is increased shareprice based on real value company building towards future expectations.
Share dilution does that to shareprice but the noteholders taking shares suggests that they expect the stock to do better and also stops the interest (mentioned was $3 million).
Most pot investors are of the conviction that we need to get some kind of triggering event in the US such that they launch a greenrush that should get the same investment interest as Canada's legalization efforts did initially.
I have raised the issue before that the US are hard core business and they are protectionist against outsiders, especially Canadian LPs who have broken trail from the beginning and seem to have a headstart on skus and branding.
The naysayers think that Canopy Growth aren't doing anything constructive to bolster our shareprice.
What I see is that the STZ management team is applying regular accounting principles to determine the value of our company because you can't eat all of that over-exuberance and irrational peaks of shareprices that the first ins loved and profited from until commonsense kicked in.
The US is the big enchilada based on MSOs showing black ink because of their marketsize and pro-legal bent, at least for several States as in enough to generate enough sales to make a profit.
I don't see this recent dilution as having a long term effect but more of a necessity in anticipation of a "triggering event" such as a decriminalizing marijuana from schedule one narcotics and the Fed penalties that come with. That risk is what is keeping most non-US potpreneurs from setting down roots in the US. When that is dealt with and the US investors that haven't entered this segment of the market, shares will be in short supply and drive demand and shareprice.
Most Canadian LPs are positioning for doing business on US soil but the concerns of the Fed issues is real enough risk that they won't jeapordize the investments and shareholders by relying on State Law protection which is more of handshake deal than something you can bank on, although I personally, am not aware of any action by the Feds yet!
The other share dilution is already contracted for when Canopy amalgamates Acreage Holdings as their US MSO first choice. For sure, I believe that Canopy will print those shares for the control of a leading US MSO which Canopy will need to fulfill their ambitious plan they are working on for leadership in the US.
Canopy's proactiveness doesn't end there because they have financially backed other US pot and hemp companies and done deals to get US capable manufacturers to make our brands that are proven in Canada.
I have mentioned before that Canopy may already be in the hands of the US investors with Constellation being a major shareholder and the huge volumes of trades on US exchanges. Fortunately we haven't drawn any fire from the protectionists, yet!
Late sellers may take WEED down a little further until US politics gets a "triggering event" legislated but I believe the upside is worth more than the downside and it probably won't get much cheaper before investors come back because you want to invest in a winner. I don't believe that STZ doesn't know what they are doing because they are the guys that see the future and move towards it by doing exactly what they are doing! Seeing the future and making it happen with an eye to the bottomline.
glta and dyodd