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HempAmericana Inc (OTCMKTS:HMPQ): Do the Math

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HempAmericana Inc (OTCMKTS:HMPQ) would appear to be mispriced according to a basic interpretation of the company’s recent communications and the overall industry and market context in which it exists. This conclusion is driven by the sense that the CBD, hemp, and cannabis space has probably bottomed, and that HMPQ is probably verging on appreciable and tangible sales growth in a manner and to a degree that the market will no longer be able to ignore.

Let’s first turn to the former of these allegations: the CBD, hemp, and cannabis space has probably bottomed.

 

The Big Green Turn

It’s important to understand that, by this idea of a “bottom” in the green machine, we mean a cyclical inflection from the longstanding 18-month bear market to a new bull cycle that sees the stocks in the space, including HempAmericana, witness powerful price-per-share appreciation.

The driver is partly seasonal, partly situational, and partly cyclical.

The seasonal influence is rooted in the fact that some significant portion of the cannabis cash crop is brought to market from outdoor growers (as opposed to greenhouse and indoor growers), who are now just starting to tend to the crops that will become the fall harvest. In other words, the supply of cannabis coming to market has started to become seasonally reduced during the period from April to October, meaning that we are now in the early stages of that seasonal dip in supply.

Situationally, demand for cannabis is clearly on the upswing during the stay-at-home coronavirus response. This is due to some presumed combination of anxiety and boredom.

Finally, the CBD, hemp, and cannabis space had already been through an extreme ringer by the time we hit the broad coronavirus bear market. In other words, we had already whittled down the stocks in this space to bare bones when the broad market wind started to blow. That likely over-exaggerated the dynamic, driving these stocks to an undervalued threshold – an overextension of the downward trend.

 

The Stars Align

At the same time that we are starting to see the right type of signals to suggest that money will likely be flowing back into CBD and hemp plays in coming months, we are also seeing the right type of signals from HMPQ: the ecommerce engine is up and running live with a payment processor capable of taking payments from all popular methods of commerce, the company is partnering with Alibaba’s winning B2B platform as a supplier, HempAmericana just gobbled up a vast affiliate marketing network of over 400 relevant domains and sites to point back to its store, and just made important announcements about beefing up its marketing and customer service capabilities.

All of this comes on the heels of news that it had built up a strong inventory of high-quality CBD products and after constructing a truly state-of-the-art extraction and production facility in Maine with a supply chain already in place.

Those are really all of the pieces to churning out really nice financials over coming quarters and it puts the company in a place it has never been before – prepotency across the board.

To help add some extra juice and get the ball rolling on the top line, the company also just announced that it is now marketing its products on the Groupon platform.

“As part of our aggressive pursuit of brand and product sales growth, we are launching a promotional campaign designed to create further market penetration through the largest digital coupon platform on the planet,” commented Salvador Rosillo, CEO of HempAmericana. “Millions of people search for deals on Groupon, providing us with a resource for generating immediate sales growth and relationships with new customers that hold the potential for repeat business for years to come.”

 

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