This company is one of the top cannabis producers in the world. And once its deal with multi-state marijuana operator Harvest Health & Recreation eventually goes through, it could even be the…
industry leader in terms of revenue. It will have a strong presence in both Arizona and Florida, while also penetrating new markets that should help further diversify and add to its top line.
But despite all that optimism for Trulieve Cannabis (OTC:TCNNF), investors have been incredibly bearish on the stock. In just the past six months, its shares have fallen more than 41%, while the Horizons Marijuana Life Sciences ETF has declined by 31%. Is now the time to load up on this marijuana stock, or are there some valid worries that should keep investors away from Trulieve?
Why is the stock struggling?
There isn’t an overwhelming reason why marijuana stocks in general would be falling as heavily as they have been. That said, growth stocks overall have been struggling — Cathie Wood’s ARK Innovation ETF has fallen more than 6% in six months, while the S&P 500 has risen 18%. And a lot of that may have to do with inflated valuations.
Cannabis investors may have also been expecting more progress when it comes to marijuana reform. In January, the CEO of Canadian marijuana producer Canopy Growth said he expected to be operating in the U.S. within 12 months, a target that right now looks to be even more of a pipe dream than it was when he first made that overly optimistic projection. Although U.S. Senate Majority Leader Chuck Schumer has introduced draft legislation that could lead to the federal legalization of marijuana, there’s little reason to expect that will happen before the end of the year.
Another reason Trulieve has been struggling of late is that J.T. Burnette, the husband of CEO Kim Rivers, was convicted on public corruption charges in August. Although Trulieve has stated that the company is not involved in these legal issues, shares of the pot stock still fell more than 6% the day after the news hit as trading volumes hit more than 1.2 million — their highest in more than a year.
With the company-specific bad press and softness in growth stocks of late, Trulieve’s stock is now trading at around half its 52-week high of $53.73, which it hit on March 18.
How cheap is Trulieve right now?
Once its acquisition of Harvest Health goes through (the timeline on that remains vague), Trulieve will be an…
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