Anyone who thought the end of 2016 may also have seen the end of marijuana’s bull run will be pleasantly surprised by the news today that Emblem Cannabis (EMC.V) has arranged a $10 million bought deal to help build out their Paris, Ontario growhouse from big to ‘woah, dawg.’
In fact, with the exception of Organigram (OGI.V), which has been dealing with questions around it’s organic nature when chemicals were found in their product that weren’t organic or, for that matter, allowed by law, pretty much every other LP has been on a run this last week.
The king of those runs, however, has come from Emblem, which exploded out of the gate in 2017 while Canadian markets were closed, drawing a big US contingent in and popping from $3.80 to $4.40 basically overnight.
Going back a few weeks, Emblem had a little Christmas share slump, making its way down to the $2.50 range, which activated the usual cacophony of short sellers and vulgarians claiming the IPO a week earlier had been a ‘failure’, and that I was somehow walking people into bad deals.
$2.50 to $4.40 in two weeks, fam. How you like me now?
Here is a chart, because nothing says ‘mic drop’ like the actual ongoing upward trajectory of a stock that will not be denied.
Emblem had a significant war chest of $20 million+ coming into the market, and now it’s $10 million heavier.
The deal gives a special warrant for $3.63 to a syndicate of underwriters, which grants them a share and a one-half common warrant at an exercise price of $4.75 for 36 months from the closing.
Translated for my non-accredited investor types out there: The deal gives Emblem $10 million now, and brings up to $5 million more when the stock hits $4.75 – WHICH IS HAS NEARLY DONE ALREADY.
Oh, you’re worried about dilution of the stock pool? Come now, there’s 65.65 million shares outstanding, and this brings in a few million more. You’ll keep. Especially with what’s now a $280 million market cap.
The company got approval from Health Canada to produce cannabis oils on December 19 of last year, which is incidentally when it began to march upward in value.
Added to which, when the stock listed, it had well over a thousand shareholders in the pre-listing financing, so not only has the stock made its founders wealthy, a solid K of smaller investors are Scrooge McDuck-diving into their treasure rooms.
To those who did so after reading about it in Equity.Guru, you’re welcome. I suspect there’s bigger things to come.
— Chris Pary
FULL DISCLOSURE: Emblem Cannabis is an Equity.Guru marketing client. Which is a thing we’re immensely proud of.
Disclaimer: ALWAYS DO YOUR OWN RESEARCH and consult with a licensed investment professional before making an investment. This communication should not be used as a basis for making any investment.