Have the pot stocks fallen so much that they are now a buy?

by JDH on October 12, 2019

Fortunately for me, I began the liquidation process on my pot stocks many months ago, so I was spared most of the recent carnage.  The pot stock market is down around a third this year, and that’s a lot.

TGOD.TO – The Green Organic Dutchman has a brutal looking chart:

It closed on Friday at $1.19, and up 8 cents from it’s Thursday close of $1.11, the lowest it has ever been.  That ain’t pretty.  Their problem is that the financing that they thought they had in place to complete their growing facilities is no longer available, so their expansion plans are now on hold, and that’s a problem for investors.

That begs the question: if the stock was a buy at a market cap of a billion dollars, is it an even better buy at $300 million?

I don’t know.

My best guess is that they will have to do another equity raise, so presumably they will hope for a bounce in the price, and then try to raise enough equity to complete their projects.

I’m already out of the stock, and I have no plans to go back in, but if you are a gambler, perhaps now is the time.

Or not.

If they do need to do an equity raise, I would prefer to have cash on hand, so that when they do it I can get stock and a warrant, if that’s what’s offered.

So, for now, cash is king.

The smaller players will have trouble raising capital, so being an observer is the safest option.

Happy Canadian Thanksgiving; more next week.