The cannabis sector is sort of like a high school student—relatively young, full of potential, and especially susceptible to rumors. Every trader and insider analyst tries to figure out what’s being discussed behind closed doors at the big pot companies. They want to know what’s going to make the needle move so they can invest accordingly. Luckily, Rich is here to let his community members in on the latest gossip surrounding Zenabis Global Inc. (TSX:ZENA) (OTCPK:ZBISF).
Who is Zenabis?
Zenabis is a coast-to-coast cultivator of both medical and recreational cannabis. It owns facilities in New Brunswick and British Columbia. The company prides itself on its advanced knowledge of plant propagation as well as its formidable facility space, which altogether can dedicate 3.5 million square feet to the production of cannabis.
When fully operational, Zenabis expects these facilities to have an annual design capacity of approximately 490,800 kg of dried cannabis. This would make it one of the world’s biggest cannabis producers and allow it to target both domestic and international markets.
Rich has called it “a gem of a company” due to its huge production capacity and its ability to consistently go above and beyond.
“This is a recipe for success,” Rich said. “You can see based on their timelines, on their news, on their business plans, that Zenabis continues to exceed their targets. They meet or exceed their estimates.”
Recent Company News
Just last week, the company released its financial results for the second quarter of 2019. As expected, the company had a lot of good news to report. It both outperformed its original design capacity by 35 percent and reduced the cost of production. The company continues to scale quickly, moving ever closer to that massive production capacity.
One piece of bad news it reported, however, had to do with lower than expected revenue from cannabis sales. While this initially remained a mystery, Rich’s recent video on the subject revealed the truth. Sundial Growers Inc. (NASDAQ:SNDL) tried to sell Zenabis $2.5 million of cannabis that turned out to be low-grade quality.
Apparently, the pot contained “visible mold, parts of rubber gloves, and other non-cannabis material.”
This slight setback, however, has not significantly impeded the company. Its stock price sits at an admirable $1.35 and analysts at Barchart continue to offer a “moderate buy” rating on it. In the tumultuous cannabis space, that’s about as good a recommendation as any company can expect right now.
So what rumors are swirling around this well-positioned and fast-growing company?
A “Big Player” Might Be Looking to Acquire Zenabis
From a conversation with a friend who used to work at Zenabis Global Inc., Rich has tuned in to rumors that Zenabis might be acquired by a larger company in the cannabis space.
“If they did get acquired the stock would explode on that news, so those who wanted to get out could get out,” says Rich. “If they do get acquired, it would be by a monster. If they get acquired by, say, Aurora, then [shareholders in Zenabis] would get shares of Aurora.”
In addition to Aurora Cannabis Inc. (TSX:ACB) (NYSE:ACB), Rich cites Canopy Growth Corporation (TSX:WEED) (NYSE:CGC) and Tilray Inc. (NASDAQ:TLRY) as potential companies interested in acquiring Zenabis.
While these rumors cannot be confirmed, and might not actually come true, it will be interesting to watch how the gossip affects the stock price.
What do you think? Is Zenabis about to be acquired? If you hold ZENA stock, would you welcome a takeover from one of the major players? Join the conversation in the comments below.
Featured image: LinkedIn