Viridian Chart Of The Week: Even In A Correcting Market, Positive Earnings Surprises Are Rewarded benzinga.com - get the latest breaking news, showbiz & celebrity photos, sport news & rumours, viral videos and top stories from benzinga.com Daily Mail and Mail on Sunday newspapers.
The graph compares the price of a basket of large MSOs that are well covered by cannabis research analysts to the price of a basket of smaller less-covered MSO/SSOs for YTD 2021.
The smaller, less-covered companies are more volatile, generally rising faster in up markets and declining faster when pricing weakens. This is consistent with the markets for these stocks being less liquid.
YTD the smaller cap, less-covered group has outperformed their more covered counterparts by approximately 9%, however the gap has been as wide as 22%.
We have discussed the small vs large cap valuation gap in previous Viridian Capital Charts of the Week and this graph provides some modest evidence of a narrowing of that still immense divide.
The graph demonstrates a generally positive impact on the stock price of the Buyer in cannabis M&A transactions and this gain seems to relate to the size of the transaction. Cannabis investors appear to favor transformational sized deals that exceed 50% of the pre-transaction asset size of the acquirer.
We calculated the percent change in the acquirer’s stock price from two days prior to an acquisition announcement to two days after the announcement. We then adjusted this by subtracting the percent change in the North American Marijuana Index. In this way we isolated the impact of the announcement from the underlying market movement. This net gain is displayed in the blue bars and measured on the left vertical axis.
The Viridian Cannabis Deal Tracker is an information service that monitors capital raise and M&A activity in the legal cannabis industry. Each week the Tracker analyzes/aggregates all closed deals and allocates each transaction to one of twelve key industry sectors in which the deal occurred (from Cultivation to Brands), the region in which the deal occurred (country or U.S. state), the status of the company announcing the transaction (public vs. private) and the type of deal structure (equity vs. debt).
The Viridian Cannabis Deal Tracker provides the deal data/terms/valuations/structures and market intelligence that cannabis companies, investors, and acquirers utilize to make informed decisions regarding capital and M&A strategy. Since its inception in 2015, the Viridian Cannabis Deal Tracker has tracked and analyzed more than 2,500 capital raises and 1,000 M&A transactions totaling over $45 billion in aggregate value. Find it exclusively on Benzinga Cannabis every week!