Marijuana is arguably the hottest investment on Wall Street right now. Although cannabis stocks have underperformed a bit since the beginning of May, their performance, when looked at over the past couple of years, has run circles around broader-market returns.
Within the next decade, the global cannabis industry could be generating north of $50 billion, and perhaps even $75 billion, in annual sales, according to various Wall Street estimates. This means the entire cannabis supply chain, from growers to ancillary players, could make investors a lot of money. And it just so happens that a new type of ancillary player debuted on the Nasdaq last week in a first-of-its-kind listing.
This is the hottest pot stock on Wall Street right now
One week ago today, MTech Acquisitions, a shell company focused on making acquisitions, and cannabis-software services company MJ Freeway, completed their merger that was first announced in October. Upon completion, the new entity, Akerna (NASDAQ: KERN), began trading on the Nasdaq on Tuesday, June 18. This marked the first time that a cannabis company had listed on the Nasdaq without an initial public offering or an uplisting from the over-the-counter exchange.
Akerna’s first day of trading was rather tame, with the company’s stock closing at $14.85 a share on just over 120,000 shares traded. But business picked up in a big way on Wednesday and Thursday, with more than 3 million shares traded each day. Akerna’s valuation more than tripled on Wednesday to a close of $49.80, then briefly gained another nearly 50% to hit just shy of $73 early Thursday morning before retreating.
What has investors so excited about this newly listed pot stock that they felt it was worth a nearly 400% premium in a matter of two days? The answer lies in the company’s business model, which is something investors haven’t seen listed on the Nasdaq before.
Akerna’s primary focus is on developing software unique to the cannabis industry. In other words, it didn’t take software designed for another sector or industry and design it to fit the marijuana model. Rather, the MJ Freeway team has been developing and refining software for around a decade that handles two primary functions for weed businesses: seed-to-sale technology and consulting services.
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