Recently there has been widespread fear surrounding vaping and vape devices. There have been multiple deaths across the US and Canada related to vaporizers, especially ones that contain THC. Some of the users have tried a mix of products and devices while others were only vaping nicotine. CBD was also used along with a combination of THC and nicotine.
This news is relatively new and the fact that extensive research still needs to be done on vaping is not a good thing for Greenlane Holdings (GNLN).
In April of this year, Greenlane IPO’d at $17 and has been declining ever since. The company hit a low of $3.55 in recent trade and has been retesting that support level. We will see if Greenlane Holdings will set fresh 52 week lows in the coming weeks but also we are looking for the slightest glimmer of hope for any investors who are still with the company.
What is driving the stock lower is the news that various lawmakers and societies are pushing the FDA to bad e-cigarettes until the market can be properly regulated. This could deliver a massive blow to Greenlane holdings as they rely on Pax and Juul for at least 60% of their revenues.
Recently Juul announced that their CEO and co-founder Kevin Burns has stepped down. This comes after the news about deaths due to e-cigarette use have popped up all across America. The company announced that they will halt all digital, print and broadcast advertising in the U.S. during a news release Wednesday. Juul is making no changes in Canada, or anywhere else. Due to this news and uncertainty, it makes Greenlane holdings an extremely speculative investment in the eyes of many investors, but where is the upside in this stock?
Like any scandal or a huge amount of uncertainty that takes place within the market, to put it simply, investors absolutely hate when there is a looming decision or an event that could happen that would be extremely detrimental to a company’s revenue stream. When it comes to Greenlane holdings, the pending decision by the FDA whether to ban e-cigarettes carries a massive amount of uncertainty in the market, especially with more deaths popping up and the recent news of Juul’s CEO’s recent departure. This has caused investors to punish the stock and is probably the main reason why Greenlane Holdings is sitting very close to their 52-week lows. With the cannabis sector in a full-blown bear market, it’s not a very friendly environment for Greenlane to begin with.
Using Canntrust as an example of how a stock can get crushed, many investors are probably a lot more cautious this time around and will want to see confirmation from the FDA that e-cigarettes will not be banned. Now on the flip side, the stock could be heavily oversold, and if the FDA decides that they won’t fully ban e-cigarettes, this could offer huge upside for this stock. At this point in time, Greenlane holdings are on our watchlist but we view it as an extremely high risk to reward play right now, not for the faint at heart.
GNLN shares were trading at $3.69 per share on Thursday afternoon, down $0.18 (-4.65%). Year-to-date, GNLN has declined -82.51%, versus a 20.33% rise in the benchmark S&P 500 index during the same period.
About the Author: Aaron Missere
Aaron is an experienced investor who is also the CEO of Departures Capital. His primary focus is on the cannabis industry. He also hosts a weekly show on YouTube about marijuana stocks. Learn more about Aaron’s background, along with links to his most recent articles. More...
