The Weekender – August 30th

Grizzle’s All-star strategist lays out why this election is looking like a one issue race. Filled with excellent insights and recent polling data, this week’s market strategy piece makes a compelling argument for why Trump better hope COVID-19 cases are in decline come November.

Joe Biden and Kamala Harris said they would “decriminalize”, not legalize cannabis if elected. What this tells us is they will allow full access to the banking system and make medical marijuana federally legal. The U.S. cannabis stocks are obviously trading up in hopes Biden ends up the winner in November’s election.

Anyone in the CBD and hemp business is having a very tough go of it right now. Wholesale hemp prices are still falling towards marginal cost and regulators are delaying new laws that would make it easier to operate a legitimate hemp business in America. We implore investors to stay away from this space until there are regulations in place and wholesale prices bottom. Follow the ticker CWEB to see when the industry’s fortunes are on the mend.

There was chatter going around the market last week that multi-state operator Green Thumb Industries may big for Trulieve Cannabis, another MSO. We actually think this deal could make sense. Trulieve has the cashflow, while Green Thumb has better growth and a diversified footprint. They both have a footprint in MA, but Trulieve is very early and would simply have to sell their license, netting a pretty penny in the process. Chances of this deal actually happening soon are low, but if you own either company, we would continue holding if a merger is eventually announced as more upside would remain.

U.S. Cannabis Comp Sheet

Many SaaS stocks are back to all time-highs after positive earnings reports from Salesforce and others this week. Even though multiples are at nosebleed valuations of 40x-50x, the stocks will continue to work as long as investors are willing to pay for growth at any cost. However you should be prepared for the stock prices of these company’s to fall fast and hard should market sentiment turn more cautious for any reason. Many SaaS Stocks fell 20%-30% in only 3-4 trading days in early August.

During Tim Cook’s interview with members of the house, he admitted that Apple only takes a 15% cut of Amazon Prime Video purchases on the Apple app-store while every other company pays 30% on in-app purchases. Now other digital publishers want a discount too. Apple has all the negotiating power so it will take time for the 30% cut to crack, but with the cat out of the bag, eventually the public and private pressure will reach a breaking point, forcing them to offer lower rates to at least some of the larger players out there besides Amazon.

Here at Grizzle we will be covering these IPO’s in depth so check out our social channels and Grizzle.com for updates on when our IPO guides will be released on each. With the tech market white hot right now, the stock performance of all six IPO’s on day 1 as public company’s will no doubt be stellar compared to where the stock’s are being priced.

The six stocks along with their IPO filing links are: JFrog, Asana, Palantir, Sumo Logic, Snowflake and Unity Software.

The opinions provided in this article are those of the author and do not constitute investment advice. Readers should assume that the author and/or employees of Grizzle hold positions in the company or companies mentioned in the article. For more information, please see our Content Disclaimer.

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