Murk, If legalization comes and the company has not signed any GIFT participants I don't think there is any salvage value to the program. And I do believe the stock trades more on optimism of the business plan than on any fundamentals. I am long on PHOT.
So the question of this company's value in my mind becomes; what is the intrinsic value of the potential of their business plan?
I see the greatest value of their business plan is operating in an envelope of time created by the licensing program to grow marijuana and full legalization. In that space they have realized they can use capital lease terms to extend capital funds into the MJ space without going through government licensing...much cheaper and takes less time, but is a perishable idea. I see three things working against the company.
1. Legalization before they can completely deploy their business plan
2. Change in political guard closing the window on legalization
3. Acquiring the right pieces in the space of time created between legalization and change in political guard to execute on the business plan.
This dovetails back into my earlier post on capital v operating leases. I believe the company needs additional infrastructure in order to execute on the plan. Why do I say this? When they list what the $40MM in funds are for the article says Acquisition, Growth capital, and GIFT. "Growth capital" is semantics for acquisition.
When you make a list, how do you list items? Usually from most important to least important.
1. Acquisition
2. Acquisition
3. GIFT
There seems to be something else this company needs to make this train move. Not a negative, just a normal everyday run of the mill challenge.
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