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New York-based Ascend Wellness Holdings is a multi-state cannabis cultivator with operations in five states in the USA. The company trades on the CSE and recently completed their IPO in early May 2021 when the stock surged 22%. Ascend Wellness has a strong focus and strong branding but is this cannabis stock a buy?

Let’s take a deeper look at both the fundamentals and technicals for Ascend Wellness to see if this cannabis stock is a buy.

Ascend Wellness Fundamentals

Ascend Wellness: Is this Cannabis Stock a Buy?Profile

HQ: New York, NY, USA
Founded: 2018
Symbol: AAWH (CSE)

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Company Focus: Strong

Ascend Wellness Holdings is a multi-state operator with operations in Illinois, Michigan, Ohio, Massachusetts, and New Jersey. They built a lot of excitement with investors for their May 2021 IPO and opened trading on the day at $9.50.  They are very new so there isn’t much for history but we’ll summarize them below.

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Ascend Wellness Size: Neutral

Market Cap: US NA
Enterprise Value: NA
# of employees: 850

Markets: Neutral

Primary: USA
Secondary: Canada
Majority Subsidiaries: MOCA LLC; Ascend NJ LLC; HealthCentral; Revolution Global

Company Operations: Neutral

Cultivation: 38,000 lbs. annually through their five states

They have 16 retail stores open now

Vertically integrated: Yes
Horizontally diversified: No

Ascend Wellness Financials: Strong

Revenue (ttm): $187.3 million
Outstanding shares (diluted): recent IPO included 10 million shares

WATCH: Ascend Wellness Technical Analysis

Company Management: Neutral

CEO & Founder: Abner Kurtin
CSO & Founder: Francis Perullo
CFO: Daniel Neville
CRO (revenue): Christopher Melillo

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Ascend Wellness Branding: Strong

They sell products through the Ozone brand. This includes flower, vapes, and gummies. Ozone Reserve is their premium brand. This is mainly flower and concentrate products. They also carry the Cookies brand, 1906 (infused products), and Airopro (vapes) brands.

Valuation: Weak

Current share price: US $9.50
52 week high/low: $8.26-9.85
Price to Sales: N/A (too new)
EV/Revenue: N/A
Price/book: N/A

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Financing: Strong

This May 2021 IPO raised $80 million through 10 million class A common stock shares at $8 per share.

Risks of Buying Ascend Wellness Stock: Medium

The risks of investing in any cannabis company are very high given the immaturity of the market and all competitors. This company has additional risk in that they are so new but that is mitigated a bit by their multistate presence and high potential revenues.

Ascend Wellness: Is this Cannabis Stock a Buy?

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Ascend Wellness Holdings generated a lot of press with their Canadian IPO. Some were even calling them the hottest cannabis stock of 2021. We wouldn’t go that far but there is a lot to like.

They have a presence in mainly large markets, have high projected revenues ($190 million), and are timing the market well with some cannabis stocks recovering from early 2021 losses. They’ve raised funds through three rounds totaling around $176 million in total raised funds. This leaves them well capitalized.

The issues are that trading volume is low on their stock, the CSE is somewhat liquidity limited, and their debt is still pretty high at $370 million. Their highly held by insiders (24% of shares held by insiders) but the institutions do love them (11.6% of shares held by institutions).

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If they can continue to grow revenue without feeling pressured for overpriced mergers and acquisitions, they can then pay down debt and grow their stock price. The CEO, CFO, and CSO together make over $1 million dollars. Hopefully this high spending doesn’t carry over into all their business practices!

There is some to like here, but too much holding us back. We give them a neutral rating for now but watch for an updated analysis on them in early 2022 to see if that changes.

Ascend Wellness: Is this Cannabis Stock a Buy?

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