Photo by Ezekixl Akinnewu on Pexels.com

Canopy Growth Stock Price Skyrockets Again on Monday

Why Did Canopy Growth Corporation’s Stock Price Skyrocketed on Monday?

(by Glenford S. Robinson)

Canopy Growth Corporation (NYSE:CGC) stock price skyrocketed by 14.24% to $56.89 from $49.63 on Monday because the company announced that it had acquired Hemp innovator Ebbu for a reported $25 million in cash and an eye-opening 6,221,210 in the Company’s common shares. That is a whole lot of money to spend on any asset.

So, this Ebbu deal better pan out or else a lot of money will disappear down the drain. In fact, another $100 million in purchase price will be due for payment provided that certain scientific related milestones are achieved within two years following closing of the acquisition.

Canopy Growth has many options at its disposal for satisfying the purchase. The Company can either pay in cash or in shares or a combination of both. If for instance the purchase is satisfied in Company shares, the number of shares will be calculated based on the volume-weighted average price of the shares on the Toronto Stock Exchange (TSX) for the 20 trading days immediately prior to or before the date of achievement of the applicable milestone.

Before any deal can be finalized, the transaction must be approved by regulatory means, which includes approvals by the Toronto Stock Exchange and the New York Stock Exchange. This will give rise to ongoing disclosures required by CSA Staff Notice NI 51-352 for US transactions. The purchase or asset acquisition transaction is expected to close in November 2018.

What does this mean for the stock price of Canopy Growth? This means that a high level of volatility should be expected during the time leading up to closure of the acquisition in November 2018. And in trading, the higher the volatility, the easier it is to make a profit. No volatility in the financial markets means no opportunity to make a profit. So, we can be rest assured that traders and short term investors will be gearing up to partake in the opportunities that lay ahead in trading CGC in coming days and weeks.

A little about the two companies in this merger and acquisition deal. According to the press release, Canopy Growth is a world-renowned leader in the diversification of Cannabis and Hemp products, offering a distinct category of brands and curated cannabis varieties in dried oil and Softgel capsule forms.

Leading sector iconic names such as Snoop Dogg, breeding legends DNA Genetics and Green House seeds, and Fortune 500 alcohol leader Constellation Brands have all forged deals and have established partnerships with Canopy Growth.

On the other hand, Ebbu a Colorado-based company specializing in designing cannabis-based medicine and mainstreaming adult-use cannabis is more of a cutting-edge medical cannabis research technology company that believes in the power of cannabis to change people’s lives, according to the company’s website. The website also said “the Company (Ebbu) is working toward a new paradigm where patients can be assured consistent therapeutic effects—and consumers can confidently choose the exact experience they desire.”

Disclaimer: © 2018 mstardom.com. Mstardom Finance does not provide investment advice. All rights reserved.

Disclosure: I am/we are long CGC.

This article was written by me, and it only expresses my opinions. I am not receiving any kind of compensatory reward for this article, and I have no business relationships with any company whose stock is mentioned in this article.

Editor’s note: This article covers one or more stocks that deals directly with products derived from the cannabis plant. Please be aware that cannabis and related substances are illegal in some American states and still remains a Federally band substance.

Check Also

Alert image

Investor Alerts and Bulletins: The Escheatment Process

Keep your contact information updated. Financial institutions must attempt to notify you before escheating your account. Make sure financial institutions at which you have accounts have your accurate contact information (telephone, e-mail and physical address) to help ensure you receive any notices related to your accounts. If your financial institution sends you mail that is returned as undeliverable, or it cannot reach you through your other contact information, your account may be declared abandoned and end up in escheatment.

GDP Growth Slowed

US Economy Starts to Slow Entering 2019, but Headwinds Ease

The Federal Reserve has signaled that it will postpone further interest rate hikes until signs of rising inflation emerge and cease balance sheet normalization activities towards the end of this year. Stock price gains since the announcement of these policy shifts illustrate that if they are executed, business confidence is likely to rise.

Where can I get business financing?

Horizon Technology Finance Provides Investment Portfolio Update Increases Portfolio Size with $24 Million in Loan Originations; Grows Committed Backlog to $47 Million

"During the third quarter, we experienced solid investment activity, increasing the size of our portfolio and expanding our committed backlog for the second consecutive quarter," said Gerald A. Michaud, President of Horizon. "Our success funding seven loans, totaling more than $24 million, and growing our committed backlog to $47 million underscores the strong demand for our venture debt products to growing life science and technology companies. We believe Horizon will continue to benefit from a robust pipeline of investment opportunities and is well positioned to deliver long-term, disciplined portfolio growth, while ensuring credit quality remains strong."

ECB profit increased in 2018

Financial Statements of the ECB for 2018

The ECB’s net profit is distributed to the euro area national central banks (NCBs). The Governing Council decided to make an interim profit distribution, amounting to €1,191 million, to the euro area NCBs on 31 January 2019. At yesterday’s meeting, the Governing Council decided to distribute the remainder of the profit, amounting to €384 million, on 22 February 2019.

Litigation Photo

Immune Design (IMDZ) Alert: Johnson Fistel Investigates Proposed Sale of Immune Design Corp.; Are Immune Design Shareholders Getting a Fair Deal?

The investigation concerns whether the Immune Design board failed to satisfy its duties to the Company shareholders, including whether the board adequately pursued alternatives to the acquisition and whether the board obtained the best price possible for Immune Design shares of common stock. Nationally recognized Johnson Fistel is investigating whether the proposed deal represents adequate consideration, especially given that one Wall Street analyst has a $9.00 price target on the stock and the Company has approximately $100 million in cash and no long-term debt.

Mergers and Acquisitions

Merck to Acquire Immune Design; Acquisition Bolsters Capabilities in Vaccine Development for Infectious Diseases and Cancer

“Scientists at Immune Design have established a unique portfolio of approaches to cancer immunization and adjuvant systems designed to enhance the ability of a vaccine to protect against infection, which could meaningfully improve vaccine development," said Dr. Roger M. Perlmutter, president, Merck Research Laboratories. “This acquisition builds upon Merck’s industry-leading programs that harness the power of the immune system to prevent and treat disease.”

SEC Files Charges in Elaborate Microcap Stock Fraud

“As alleged in our complaint, Magna Group and its co-defendants used fake debt instruments to unlawfully obtain shares in microcap companies, which they then dumped on unsuspecting retail investors,” said Sanjay Wadhwa, Senior Associate Director of the SEC’s New York Regional Office. “This action demonstrates the resolve of the SEC in pursuing fraudsters who use elaborate financing schemes to engage in securities fraud.”